In a survey carried out in December 2007 by the Bank for International Settlements, it was estimated that the average turnover of the foreign exchange market, on a daily basis, stood at a staggering 3.98 trillion US dollars.
With such an awe-inspiring sum of money being turned over each and every day, it is understandable why the interest in forex is increasing amongst those outside of the industry. With many companies and forex brokers capitalizing on this fact, it is becoming increasingly popular and to a degree, easy, for a complete beginner to start trading forex, on the assumption that they have in place the following five items.
1. Computer. Before any trading takes place, the first and foremost item that is required is a computer with internet access. There are many different forex brokers to choose from and a seemingly infinite number of free learning resources to take advantage of online, but without the use of a computer and the internet, none of it can even begin.
2. Software. For the actual trading of forex, a piece of software that shows all of the relevant information in an updated fashion is needed. The industry standard is widely regarded as being a program called Metatrader, which is used by a substantial amount of online brokers. Now in its fourth generation, Metatrader is a program that whilst it might vary slightly in appearance between brokers, uses exactly the same software to offer up-to-date information on the market.
3. Money. In addition to a computer and the relevant software, the last remaining necessary item that is needed is money. There are pieces of software like Metatrader that will allow you to trade forex for free, but which offer no money in return (in essence, it is nothing more than a game for gaining experience), but to actually trade forex for financial gain, you need a sum of money to use.
There is no stipulation to how much money is needed to start, but it is always advised that due to the high volatility of the market, the money used is spare capital.
4. Experience. This point and the following are the two items that are not seen as necessities for trading forex but are strongly advised to have in place.
As with anything, the more experienced you are at it, the better you become and although no one can predict the future, by understanding forex and the historical data, with enough experience, you can estimate relatively precisely when is the best time to buy or sell currencies.
5. Time. It may seem obvious to some, but a lot of beginners neglect the fact of just how much time is needed to be able to trade forex properly. Whilst it is possible to carry out trades once or twice a day at peak times, it is recommended to be continually checking programs like Metatrader to see if there are any unexpected opportunities to buy or sell currencies, which otherwise may have gone unnoticed.
Aside from actual trading time, for completely new beginners, a considerable amount of time will need to be spent researching and fully understanding how forex trading works. This time will vary between people, but will generally be anywhere from several weeks to several months, depending on how much time, effort and practice is put in on a daily basis.