Forex Trading for Beginners in the UK
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So you live in the UK and you're interested in learning about forex trading?
Let us start by congratulating you! You’ve decided to learn a new skill and join the exciting group of forex trading beginners in the UK.
You can use this article as a detailed and practical step-by-step guide to understanding what is forex, how to trade forex, and what information you should be prepared with if you are one of the many that want to become a part of the community of beginner forex traders in the UK.
If you want to become a forex beginner and be able to achieve your goals and milestones as a forex trading beginner it will be pretty challenging and does require some hard work.
However, you must start somewhere, right? In this article, we at Trading Education aim to provide you with the information you will need as a forex trading as a beginner in the UK by answering some common questions that you may have before embarking on this world of forex trading.
So before you kick-off here is what you need to know!
What is forex?
The international currency market or simply put forex market is a global system that operates by mediating, managing, monitoring and making it possible to trade with different national currencies.
With a daily turnover assessed at $5.3 trillion, it can easily be concluded that forex is the biggest and most dynamic market in the world.
Besides this definition, you can use a lot more words to describe forex and you won’t be wrong if you use the word liquid which means it can be a highly volatile market, 24/5, accessible and a market that offers many opportunities for success and also for failure.
Despite the fact that forex has a lot of characteristics, the market functions and operates following a few very simple rules and perhaps this is one of the many reasons why so many beginners choose to trade with foreign currency, it is after all accessible for everyone!
If you are interested in the topic of forex trading for beginners in the UK and you have no previous experience with forex trading you will be surprised to find out that actually, you probably do!
Have you ever exchanged some money in a local currency in the exchange desk at the airport or supermarket?
Now, this is forex! However, exchanging currencies while you are on a holiday makes you the last link in this chain.
As a forex trader instead of exchanging one currency for another as you would do when going on a holiday, you instead will be making predictions on the potential direction of one currency against another.
You probably want to learn more about forex trading for beginners in the UK, and you will just continue reading!
Our job at Trading Education is to help you better understand and navigate the realm of forex and this is why we provide you with a lot of opportunities to do so! Just check out the comprehensive and world-class quality forex education course you can benefit from for absolutely free.
Once you finish with the initial stage of your education you can continue refining your forex trading skills by taking part in the courses helping you master fundamental and technical analysis. Then you keep your skills and knowledge fresh by following the regular updates in the articles section here.
But now let’s continue with welcoming you in the world of forex trading for beginners in the UK.
Whether you exchange currency in the exchange desk at the airport or a big bank institution sells $100 million to buy Japanese yen, in both cases we’re talking about forex.
The players on the forex market field vary from the big sharks' financial corporations to the small fishes and work-from-home traders who often trade with much less money sometimes even just a few hundred.
Everyone can become a forex trader because the volumes, dynamic, and opportunities offered by the forex market are really exceptional. It is assumed that forex is the market closest to the concept of a “perfect market”.
All participants, from the biggest banks to the individual investors, trade on equal terms, have equal access to information, benefit from no limits for entering and leaving the market.
You might also like: How to Stop Being a Forex Trading Noob
Why do people trade forex?
You’re are probably wondering why do people trade forex? What’s the draw?
Well, it’s to make money, that's simply what it comes down to when talking about forex trading.
But people also exchange one currency for another are often doing it to purchase something from another country and another currency from their own, but forex traders are looking to predict the movement of the market so that they can make money.
However, keep in mind that forex trading and trading, in general, do not guarantee a profit or success. It is all up to you and the decisions you make.
But why forex?
Everywhere around the world from the UK to the US and all other countries, governments, businesses, and individuals need currency exchanged all the time, which means that the forex market never stops operating.
Everyone teaching forex trading for beginners in the UK will tell you how sleepless forex is and how much of flexibility this provides for you but also requires some hard work and dedication.
In addition, forex does not have a physical location and you can trade from the comfort of your own home anytime, in fact, you can trade from anywhere as long as you have an internet connection.
People also read: How to Start Trading Forex from Home in 5 Easy Steps
Naturally, there are some parts of the day and night that are heavier on currency trading deals but as a whole, the market is never limiting you in time.
Another good reason for your interest in forex trading for beginners in the UK is the fact that in this market you can both buy and sell.
Unlike the limitations at the beginning of the 20th century and the birth of the Dow Jones index when investors used to be able to make a profit only by buying, nowadays forex allows the possibility to make a profit from both buying and selling.
No matter if the trends are up, down, or in range, the forex market is still operating and traders can still do their thing.
Trading forex does not require major initial capital. Most of the forex accounts trade with little to none commission, there are no exchange charges and no data licenses.
In addition, you can open a forex trading account with very little money, The initial deposit when trading forex is significantly lower compared to many other markets. This is one of the many reasons why forex is an ever growing market.
The high leverage of the forex market is yet another reason why so many people want to become forex trading beginners in the UK.
The high leverage allows you to trade some serious currency volumes and make some big deals despite the fact that you have a low initial capital and investment.
The more pairs you trade with, the more opportunities you will have, which means that the market’s leverage provides you with better opportunities to be able to enjoy a good profit and a constant income.
However, the high leverage can also lead to many unsuccessful deals and a major loss so always keep in mind the risk and act accordingly.
How do you get started with forex trading?
If you’re a forex trading beginner in the UK and you’re looking to dig a bit deeper into the topic you are may be thinking of forex trading as some sort of rocket science at the beginning but it’s actually really not that complicated to understand the basics.
The truth is you can open a forex trading account in as little as a single afternoon but this does not mean that you will be able to figure out what to do next in such a short period of time. So here are a few steps to undertake when you are about to get started with forex trading:
- Educate yourself – We cannot stress more the importance of relying on a good education and training background when starting to trade forex. An up-to-date course created with professional information and tailored to your needs will not only provide you with the fundamental knowledge and understanding of the mechanism of the forex market but it will also help you carve out your way in the forex world by helping you figure out your own forex trading strategy, growing a risk tolerance, discipline, patience, flexibility, and a number of important skills you will find so valuable.
- Understanding the forex lingo – A good understanding of the most commonly used forex terms you are about to see and hear all the time is very important too and will make your entry to the market significantly simpler. Some of the words and phrases you can focus on remembering at this initial stage include base currency, quote currency, bid price, ask price, spread, pip. All these and a lot more will be explained in a Free forex course for beginners in the UK. You can also invest in a few forex books and take your time to read online materials and articles.
- Choose the best broker – Choosing the best brokerage company is very important because this is the exact firm that will help you make trades. A reliable and trustworthy brokerage firm is what you are looking for as your choice can make a lot of difference between profiting from your trades and actually losing money. So make sure to take your time and do a thorough research before choosing your broker. If you don’t have the time to compare the thousands of options available we’d suggest taking a look at one of our top-rated partner brokers.
- Analyse the world economy – Forex is a part of the world’s economy and as a part of it, forex is affected by the changes happening in the world’s economy. One of the good ways to make sure you can utilise the opportunities forex is offering for making a profit is by predicting the movement of the economy. So make sure to research important economic aspects such as trading positions, GDP, the political climate of countries, etc.
Forex trading tips for beginners
When you are a forex trading beginner in the UK you may at times feel lost and overwhelmed at this initial stage of your development as a trader. Expect to be bombarded with information and hot tips on how to become successful overnight. However, in the majority of the cases, all these tips and tricks are not particularly helpful. Because of that, we provide you with a few forex trading tips for forex trading beginners in the UK.
- Don’t just jump in with no education. A good and reliable educational background is highly recommended.
- Put all your stop losses at a safe distance away from your entry price. Don’t put them too close.
- Focus on interpreting the daily chart and trade accordingly.
- Limit the trading with a high frequency as it may lead to emotional trading and make you fail fast and lose a lot of money.
- Be realistic and don’t expect that forex trading will make you a millionaire and you will be able to quit your job and trade forex from the beach for the rest of your life.
- Learn how to interpret price changes and price action.
- Do not panic and over-react at the first sign of a turbulent trade. Trades going against you is something that happens to everyone, it is all about how you control your emotions in such a situation.
- Find a mentor who will help you to not get overwhelmed by the amount of information and things you will have to remember at this initial stage.
- Learn one forex trading strategy or develop your own that fits your trading style and personality and make sure to stick to it.
- Take your time and first learn the mechanism of forex, all the basics, and the important fundaments.
What are the different types of trading strategies?
The majority of the forex traders develop and master their own and individual trading strategy overtime that can use different aspects and components of the two main and often used trading strategies in the forex market which are technical and fundamental analysis.
- Fundamental analysis – Fundamental analysis is commonly used by a lot of forex traders although it can take a lot of time. This strategy usually used for predicting long-term trends and consists of evaluating the value of countries in order to make a forecast based on this economic outlook. However, the strategy is sometimes used by investors for making short-term trades by basing their predictions on news releases. The important indicators you can utilise and watch when using a fundamental analysis include Non-farm Payrolls, PMI, CPI, Retail Sales, Durable Goods. You can also make sure to follow all meetings providing commentary on interest rates, inflation, other issues that can affect currency valuations. As a whole, these meetings can affect markets as much as the reports. By utilising the information you can gain through fundamental analysis you can better understand long-term market trends and sometimes profit from market moving events.
- Technical analysis – If you are a forex trading beginner in the UK, you are most probably going to start with technical analysis. It is by far the most common strategy used by day traders and it allows for analysing price trends in a timeframe adapted to the 24-hour forex market. When utilising the technical analysis strategy you will work with the Elliott Waves, Fibonacci Studies, Parabolic SAR, Pivot points in order to make better predictions and understand buying and selling conditions.
Managing your risk when trading forex
A solid and reliable forex risk management plan that you stick to when you make a trade is very important and plays a big role in preventing rookie mistakes and major losses.
Every time you read something related to forex trading for beginners in the UK you will read about the importance of risk management and all the ideas you can rely on for downside protection. Here are some basic and working ideas for controlling the risk:
- A powerful and reliable risk control method, you have to train yourself to know when to cut the losses. You either have to be prepared mentally for when you are going to jump off the sinking ship and stop trading emotionally, or you can use the method of locking in a stop loss at a certain level.
- Being a forex trading beginner in the UK, you will have to determine your lot size and the less risky way to do it is by starting small and allowing yourself enough flexibility in managing your trades.
- As a forex trading beginner in the UK, you may be tempted by the idea to open multiple lots with currency pairs but this all can lead to more losses. It is recommended to keep your exposure limited. This is a better strategy because you can keep the risk lower and at the same time increase your chances for long-term success.
Forex trading is an investment strategy that can be practised by anyone everywhere across the world. The forex market is particularly popular one in the UK and it has been like this for many years. The British pound and US dollar pair are one of the most popular ones and almost a legend with its very own name which is ‘cable’. In addition, the British pound is the fourth most traded currency in this market. You can clearly see that the connection between the UK and the forex market is deeply rooted and there is no wonder why forex trading for beginners in the UK is such a popular topic. As a forex trading beginner in the UK, you have to make sure that you have a good and comprehensive educational and training background in order to open more windows of opportunities for profit and success.
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