Forex trading is becoming one of the most popular options for traders looking into making a significant income. But there are many concepts and tools that traders have to learn to use and take advantage of to achieve success.
The best way to find guides and tips is to check InvestinGoal. Not only traders will have the chance to read reviews of different brokers, but also compare them in detail, which will be really helpful to choose the right one. This is where all Forex traders must start in order to achieve their financial goals.
With the years, new strategies prove more effective, and different tips are more relevant. Being successful as a Forex trader is not impossible but requires research and work, so we have selected the most relevant tips on how to become a successful Forex trader in 2021.
What is Forex?
When we talk about Forex, which is also commonly called FX or currency exchange, refers to the trade of a certain currency for another one. The purpose is to make a profit that comes from the different prices between buying and selling currencies.
Currencies are always presented in pairs, and most of the activity in the Forex market is done in a few very popular currencies. Among them, we can find USD, EUR, YEN, GBP.
There are also less common currencies and exotic ones, which usually come with higher spreads and more expensive costs.
Important Forex concepts
The following are some of the most important concepts that are fundamental in the world of Forex trading. Some of these concepts will have huge relevance in helping traders manage risk and make wiser trades.
All currencies come in pairs when we talk about Forex. The only way to buy one currency, traders must sell another one.
There are only a few major currency pairs and they take 85% of the whole Forex market trading.
While some currencies are more popular, among them EUR/USD, USD/JPY, USD/CAD, AUD/USD. In fact, the USD is present in most exchanges across the world.
Other currency pairs are considered less common. Among them, these are the most common EUR/GBP, GBP/JPY, NZD/JPY. These currencies represent a much smaller trade amount.
Last but not least, there are currency pairs that are exotic, and they represent a very tiny part of the whole Forex trading. They come usually with higher spreads and they are not very popular or commonly offered by brokers.
Spreads are very important when it comes to Forex. A spread is a difference between the bid and the ask price of a currency pair. This difference is measured by pips, which are equivalent to 0.0001.
Traders must be familiar with spreads and learn how to use them to make the best possible profit.
Since spreads are the cost of a transaction, lower spreads are most beneficial for traders, and choosing a broker that offers advantageous spreads will have an impact on how successful a Forex trader can be.
Another very important concept that Forex traders must consider is leverage.
Leverage, which is the amount of money a broker will lend a trader in order to make larger operations, maximizing the chances of making a more significant profit.
Traders should keep in mind that while leverage is a great tool, it must be used with care in combination with other tools that help manage risk. Of course, higher chances of making a profit means also a higher risk that comes with it.
Leverage is presented in percentages or ratios, and it goes together with the concept of margin. Margin is the percentage that brokers will keep from the traders’ capital as collateral for the leverage.
Making use of leverage should be always done when necessary and convenient, using it wisely can lead to success in Forex trades.
Choose a Forex Broker
Choosing the right Forex broker for you is the most important step in any traders’ path to becoming a successful Forex investor.
Many aspects should be considered when selecting a broker. The following are the most important ones, but there are many more.
All Forex Brokers have to be registered with the appropriate regulatory bodies of the country they offer their services.
These entities are in charge of overseeing the Forex trading and the brokers’ activities in the market, while they also set up standards, and mediate in disputes if necessary.
Traders must always make sure the brokers they offer are registered and regulated in order to make sure their information, and their money, is safe.
Offered currency pairs
The most common currency pairs are offered by all brokers. If traders are planning to invest in less common pairs, they need to make sure that the broker they are considering offers those.
Brokers offer spreads, some lower, some higher. Before choosing a broker, traders must make sure the spreads are up to their standards and convenient for their trading style.
Some traders go straight for brokers offering lower spreads, and this is not a bad idea, as long as the broker still offers other services traders are interested in.
While most brokers offer leverage, some have better deals or higher rates, which may be especially interesting for some types of traders.
Make sure your broker offers the ratio of leverage you want to use for your future trades.
Each broker has a different kind of platform and some may be best suited for beginners, others for more advanced traders. Making sure the platform of your broker satisfies your trading needs is a must.
Reliable customer service
Any trader in trouble would probably want some decent customer service. Making sure the broker of your choice offers reliable and efficient customer service will help them achieve their financial goals.
Forex brokers that accept PayPal
Since the trading world has been transformed by the online tools we have today available, it’s no surprise that many users are interested in using their PayPal accounts.
But, do brokers accept PayPal?
Most actually do, if you’re interested in finding which, check out the best PayPal forex brokers on InvestinGoal.
These are our favorite brokers that accept PayPal:
· City Index.
· IC Markets.