There are a few things that you should know before you embark on the long learning curve of becoming a forex trader. To start trading forex one needs to first look at their personality traits and decide whether forex trading is really for them. A successful forex trader is disciplined, of sound mind and above all has patients. There are various tools that a forex trader will use to aid their trading decisions and software to initiate the trades; these are the things I would like to discuss in this article.
It is a misconception that one needs thousands of pounds or dollars to speculate on the forex market, it is however a successful traders opinion that one should have a plan of loss management. Loss management or money management normally follows the simple rule that one will not risk more than 5% of their trading balance on any one trade. This is a concept to bear in mind when you start to trade forex.
The software used to initiate forex trades is called spread betting platforms; there are many companies to choose from although some have been considered not to be completely legitimate. It is important to choose a spread betting company that is registered with the financial services authority for peace of mind. From your spread betting platform you will be able to place instant trades on all the major currencies and a lot of the minor ones. You can also place orders for trades to be activated at a certain level. You will notice that different spread betting platforms have different spreads; a spread is the cost of getting into a trade, for example, to go into a trade on the GBP/USD may cost you 3 pips in which case you will start your trades 3 pips behind your price which you must make up in order to be in profit.
The most important thing to have access to be forex trading is charting software. Charting software is the tool that will display all the technical data that will help you make the decision on where to enter and exit trades, without this software you might as well put your money on a roulette wheel because you would be essentially gambling. A good spread betting company will provide you with charting software for free or for the understanding that you place a certain amount of trades with them a month.
Before you start trading forex with real money it is advisable that you learn all you can and trade with a demo account first. A demo account will also be provided by a good spread betting platform that allows you to trade real time with play money to test out your trading theories.