Embracing Forex Trading as an Alternative Investment Opportunity

Embracing Forex Trading as an Alternative Investment Opportunity

by January 24, 2019

The Forex market provides everybody with the opportunity to trade and earn. Speculative trading is the basis of profit making on Forex.

A trader buys/sells a currency at a certain price in order to sell/buy it at a better price further. The positive difference between the transactions is the desired profit of the market participants. Forex attracts traders who are guided by the goal of obtaining both additional and basic income.

Getting extra income on Forex

forex trading chart

Chart Trading | image via Pixabay

It doesn’t require a large start-up capital to enter the market. The low threshold of entry ensures the principle of margin trading. Brokers multiply the size of a trader’s funds using leverage. This instrument allows traders to enter the market with a small initial capital.


To start trading you should open an account on the broker’s website. A trading account is your access to Forex trading. For effective and profitable trading, it is important to choose the right type of a trading account. Trading accounts may vary depending on the execution method, margin requirements, spread etc.

On Forex, you can open accounts of different types. For a beginner, it is recommended to trade on practice accounts with virtual money. JustForex demo accounts are as close as possible to real trading conditions. Despite the fact that trading is conducted with virtual money, the trader gets access to the quotes of financial instruments in real time. You can open a practice demo account free of charge here, only by entering your email.

Cent accounts are intended for minimal investments and trading without risks. The deposited amount is displayed in cents. This account type is good for beginners who have already practiced on a demo account but are not yet ready to work with large sums. It is convenient to work out new strategies on demo accounts and cent accounts.

Ways to earn on Forex

Traders can use the following ways to gain income on Forex:

  1. Trading – the independent trading activity in accordance with the chosen strategy. In this case, you daily analyze the market situation and make decisions on your own. Some brokers allow starting trading with any amount and do not set the minimum deposit. Others require a certain payment to open a real account, for example, 100 or 500 USD.
  2. Automated trading – trading with robots and expert advisors. Forex advisors are special computer programs that conduct forex trading without the direct participation of the trader. This method is popular among experienced traders who want to automate proven trading strategies and thereby facilitate their work. Newbies often buy advisors because they don’t want to spend time on learning and the trading process. However, any robots have their drawbacks: they follow only one specific strategy, they can make mistakes if the situation on the market changes radically. In short, it’s unreasonable to completely rely on robots.
  3. Copy trading – copying orders of successful traders using special software. The trader does not need to participate in the trading process. At the same time, he can fully control his account. There are a number of services that allow copying orders. This method is suitable for beginners who do not want to spend their own time studying specialized literature and analyzing the market. The most important thing is to choose an experienced signals provider.

The Standard and ECN accounts in Forex trading

If you have gained knowledge and finally decided to switch to real trading, it’s time to open a real account.

Traders usually choose standard trading accounts after completing their work with cent deposits. The Classic or Standard accounts are real accounts that involve trading with real money.

They have classic trading conditions: high leverage, no commission, a wide choice of trading instruments. This account is the best option for trading on timeframes from H1 to D1, as well as for trend strategies.

ECN accounts are primarily suitable for day trading, short-term transactions, as well as for scalping. As a rule, these accounts require a higher initial deposit.

A distinctive feature of such accounts is low spreads, high execution speed. Aside from the spreads, there is an additional commission. Trading operations are executed through an electronic system that directly connects the trader with liquidity providers. Brokers do not interfere in the trading process.

 

Featured image credit: Pexels

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