ASIDE FROM conventional employment, there are effective internet-based methods to boost income. Forex, which has been around for decades, is open to UK residents. With the right software and assistance from a broker, you may gain profit by exchanging currencies, stocks or commodities. This article will help you get started and open a Forex demo account in the UK.
Fundamentals made simple
Today, the currency market is the largest in the world. The volume of daily transactions reaches 5 trillion US dollars. Until 1990, the currency exchange was only done by large-scale players, such as big banks and businesses. Nowadays, thanks to such companies as FXTM, you can access the marketplace from the comfort of your home.
Essentially, all you need is knowledge, internet access, the right trading platform (e.g., MetaTrader 4 or 5), and the services of a broker. The latter will act as an intermediary, providing access to the market and handling money transfers. Inexperienced users have a lot of opportunities to learn and hone skills before trading with real money.
How profit is gained
A traveller often needs to pay in the currency of the country they are visiting. Different national currencies may be exchanged based on special rates, which are always in flux. Therefore, just like a shareholder selling stocks for profit, a Forex trader buys and sells currencies.
All currencies are traded in pairs. Some of these are known as “major” (e.g., EUR/USD), some are “cross pairs” (e.g., AUD/CHF), and others — “exotic” (e.g., EUR/TRY). In each pair, a “base” currency is followed by a “quote” or “counter” currency after the slash sign.
Reading the indicators
To understand the basics, consider one of the most common pairs — EUR/USD. The value (e.g., 1.07) shows how much one Euro is worth in US dollars (1 dollar 7 cents). However, there is more than one price to consider for each trade.
These are the so-called “Ask” and “Bid” values. The first price applies to buying, while the other one to selling. A currency is always slightly more expensive for buyers than for sellers, which is logical.
The difference between the two constitutes the “spread”. For instance, for Ask price of 1.0962 and Bid price of 1.0958, the spread is 0.0004. This is read as a “four-pip spread” since each 0.0001 is a “pip”.
Where to start
The first step is choosing a trustworthy broker. As Forex is wildly popular, there are many companies advertising brokerage services online. Some of these are established for the scam, so take your time and do a bit of research. A reliable provider must be subject to strict regulation and have a licence to operate in the United Kingdom.
The demo mode will allow the use of the trading software for training purposes. With zero risks involved, you will be able to explore its functions, open and close positions, and see how everything works. This initial stage is a must for any responsible trader. A demo account is registered on any broker’s website, and it only takes a few minutes.
Tips for beginners
Remember that Forex is a legal finance tool that cannot be completely risk-free. However, with sufficient experience and knowledge of the trends, you will learn to make decisions effectively. Reputable brokers supply their clients with educational content on Forex trading, such as articles and tutorials. Another useful feature to consider is copy trading.
A live account, which uses actual money, should not be opened until you are sure of your skills. If risking your funds seems daunting, consider delegating the job to a strategy manager. This arrangement, known as copy trading, will replicate the expert’s trades in your account as if you were pursuing identical strategies.