Investors keen to diversify their portfolio and branch out into a new market and asset class will be well-served moving into the forex space.

This complicated market is challenging for beginners, and as a result it is dominated by large financial institutions. However, for those intrepid investors that want to enter into this space there are many ways you can make strong returns. Here we answer some of the common questions new forex traders have and discuss how you can improve your chances of succeeding in this complex market.

What Is Forex Trading?

Open 24 hours a day, the forex market is a global, decentralised market where investors can make money investing in currency.

In laymen’s terms, forex trading is the process of creating a pair of currencies on the foreign exchange market and then buying one and exchanging it to another, with the principal being that by the time you sell this second currency its value will be more than the cost you paid for the first currency and the cost of the exchange, providing you with a return.

Trading is done through an online platform, which is usually owned and operated by a specific broker. Brokers charge fees for their services whether investors make a profit or lose their money.

Do I Need A Broker To Trade On Forex?

Theoretically, it is possible to trade on forex without a broker, but even the most experienced traders often choose to work with a broker as they can use their technology, market insights and dashboard to analyse and review their trades.

Brokers often provide the platform on which an investor will trade, so it’s important that you find the forex broker that’s right for you. You can find more information on some of the most effective brokers on the market by reviewing the best forex brokers list by InvestinGoal.

How Much Should I Invest To Start?

Initially, it’s best if you start slowly and explore whether or not your currency pairs and investment strategy work well. If you invest a large amount of money at the start then you could potentially make a large loss, and you won’t learn as much as you would if you start slowly and build up towards a big trade.

What Happens If My Trades Don’t Work?

Should your strategy not work the first time, you need to explore the reasons why it’s failing and see if there’s anything you can alter to improve your results. Try to change things, and if your returns don’t improve then consider moving into a new market.

Can I Copy Other Investor’s Strategies?

Copy trading platforms allow novice investors to emulate the trades of successful, experienced traders. This saves you time figuring out the best trading strategies, and it also allows you to reduce the chances that your trades will be unsuccessful.

This approach is ideal for traders that have never worked on the forex market before and are keen to use the knowledge of other traders to their advantage.

Is There A Way I Can Practice Forex Trading Before I Invest?

Many platforms and brokers offer demo accounts, where you can pretend to invest imaginary currency and explore whether or not your approach would work before you invest real money. This will allow you to learn about trading on the forex market before you actually start putting real money into it.

How Can I Find Out More About Forex Trading?

There are loads of great resources out there for those that want to find out more before they start trading on the foreign exchange market. Blogs offer insight and knowledge on the market and the latest developments, and you can also find magazines, eBooks and even YouTube channels dedicated to the subject of forex trading and how you can improve your strategy.

Is There Another Way To Invest On Forex?

As well as copy or social trading, you can also invest using an automated forex broker, which uses a computer system to automatically find the trades that suit your preferences, without you having to search for the trades yourself. This will save you time, as you can invest in the forex trades you want without having to put the work into finding them.

There are also some investment funds that will invest on forex on your behalf, allowing you to sit back and enjoy the fruits of the fund manager’s labour without having to do as much of the hard work yourself.

Entering into any new market is a challenge, so take the time to learn about forex trading before you start. It’s never going to be easy, so remember not to be too hard on yourself if you don’t achieve the returns you were expecting immediately. If your approach isn’t working then try another, and keep reading and learning until you have forex trading down to a fine art.

About the Author:

Article by Taylor Wilman, an experienced forex trader and researcher that specializes in writing on trading strategies, high leverage forex brokers, technical analysis and forex education.