When taking a look at the forex exchange market (known more commonly as forex or abbreviated to simply FX) and its popularity, the figures speak for themselves. According to the Triennial Central Bank Survey carried out by the Bank for International Settlements in December 2007, it was estimated that almost 4 trillion US dollars were being traded each and every day in April 2007. The actual figure, 3.98 trillion dollars was made up largely of trades that took place in the main markets, which stood at a considerable 3.21 trillion dollars.
It is widely considered to many that forex trading is becoming increasingly popular, irrelevant of what the views of some financiers believe (as with everything, pleasing everyone is not possible and there are some financial traders who are not interested in trading on the foreign exchange market) and the reasons for which vary considerably depending on who is asked.
For instance, for someone who has no previous trading experience, the main allure of forex trading is that it is carried out solely online and can be done after studying the vast amount of free online resources that are available. For more seasoned traders, however, forex is appealing due to its liquidity, meaning that as it is a complete cash market, it is one of the simplest forms of trading as in theory currencies can be bought or sold at any time.
Although experienced traders will generally be aware of how to start forex trading, complete beginners will not and there are some basic points to know before beginning starting trading in this market.
The very first point to be aware of is that you need to have a good grasp and understanding of forex. As great as the temptation can be to jump in at the deep in, it is extremely difficult to succeed this way and therefore you should spend a vast amount of time reading and researching as much about the market as possible.
Once you believe that you have a good, basic understanding of forex (which can take several months), you should start trading, but only on a practice level.
Most forex brokers will have two trading platforms for you to choose from. The first will be the main one, which is where you can trade with real money and the second offers exactly the same opportunities, but with play or pretend money, much in the same way that online casinos offer free play areas.
Although there is no set guideline as to how long you should trade forex with play money for, many experienced traders would recommend only moving to real money trading after you have shown a profit in 3 consecutive months.
Once you have shown a profit for 3 months successively and you feel confident that you have a good grasp of forex trading, you need to think about how much of your own money you want to be trading with. Although there is generally no maximum or minimum limit (especially with the introduction of mini and micro accounts in recent years), many believe that a figure of 1,000 pounds or above is necessary to start trading effectively.
Forex trading can be an extremely lucrative type of trading, but it can also be financially ruining. Therefore, whichever amount of money you choose, it is important that it is nothing more than spare capital, as just like any other trading, returns on forex are not guaranteed and you could easily lose all of your money without the proper planning and preparation, something which is absolutely key for any beginners starting in this type of trading.