Do you want to trade Forex online? Are you looking for strategies, demo accounts for novices or what are the best platforms to trade on? If so, you’ve come to the right place. In this tutorial we will look at everything you need to know about Forex trading. But if you are one of the fastest, you can start Forex CDF trading straight away with Plus500 commission free here. If you prefer to go more slowly, stay with us, because we will look at all the aspects that we think it’s important to know (76,4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money).
What is Forex trading?
To understand Forex trading, we must first understand what Forex is. Forex is the name for the market where world currencies are quoted. The name comes from the words FOReign EXchange. The Forex market is the largest market in the world, and this has made many investors interested in participating in it. Why is the Forex market so big and popular? Let’s take a look.
If we stop to think, it makes sense for the Forex market to be the largest in the world. Every time an individual or a company travels or has to do business abroad, they have to go to the market to buy or sell a specific currency. For example, a British tourist traveling to Spain on vacation will have to buy euros with their pounds. When they return to the UK, they will have to use the Euros they have left over to buy pounds. Now multiply that by the millions of people who exchange currencies every day, and by the number of companies that do so when selling or buying products and services in other countries. As if that were not enough, we must add the huge number of investors and speculators who buy and sell currencies with the intention of making a profit.
There are several ways to participate in the Forex market. The most obvious is to go to a currency exchange to buy the currency we’re interested in. However, this has an important disadvantage and it is that currency exchange commissions are very high.
Another option is trading in derivatives such as CFDs. With CFDs you do not have the currencies you’re interested in, but you own a derivative product that replicates the behaviour of currencies. The bad thing about CFDs is that they are complex, speculative products, and many people lose money, but their costs tend to be lower. In fact, brokers like Plus500 charge no commission.
As we explained above, CFDs are high-risk products, so trading in them is not for novices. Instead, if you are curious about Forex CFD trading, you can start with a free demo account to see how everything related to Forex works.
Obviously, each individual can use the demo for whatever they want. For example, it is common for people with a lot of experience in online trading in CFDs based on other underlying assets, such as stocks or cryptocurrencies, to use a simulator to implement Forex CFD trading strategies.
Another reason why some traders use the demo is to become familiar with the platform of the broker with whom they want to trade. Demo accounts like those of Plus500 are free, and opening one does not force you into anything. That’s why some people open a demo to see if they like how the platform works, if it has the tools they need, or if it has the currency pairs they are interested in.
The Plus500 demo account has no time limit, which means you can use it as long as you want. Getting it requires few steps. You just have to click on the button below, and then click where it says “free demo account” (76,4% of retail CFD accounts lose money).
As you can imagine, each individual has their Forex trading strategy. Having said that, it is generally believed that there are two major categories and strategies when it comes to trading, not only in Forex, but in almost any asset. The first is technical analysis, and the second fundamental analysis.
Technical analysis basically involves the study of the value of the underlying asset that we are interested in, in this case, a currency pair. Let’s imagine that we are interested in the Euro / Dollar currency pair. In that case, we would analyze its chart looking for some kind of trend or pattern. For example, if this currency pair were moving in an upward trend, we would see that each time it falls, the decline is smaller, which is known as decreasing minimums. Likewise, when looking at its rises, we would see that they are getting higher and higher. If these two circumstances occurred, we could say that the Euro / Dollar is in an uptrend and it might make sense to consider a trade.
On the other hand, fundamental analysis involves an examination of everything related to the company, if we’re talking about stocks, or the country and its economy, if we’re talking about foreign currency. For example, the Forex market usually moves much in line with interest rates. Let’s imagine the Pound / Euro pair. If the Bank of England raises interest rates, it is likely that the exchange rate of the pound will rise against the euro. But this is just one example. The number of news items that can impact currency exchange rates is almost infinite. Therefore, fundamental analysis requires very hard, painstaking work.
As we said in the section on strategies, each individual has a different view about what is the best Forex trading platform. At the end of the day, each individual has a different opinion and a different experience with brokers, so it is impossible to say categorically what is the best online platform.
Having said that, the truth is that all brokers and their platforms are not the same. In fact, some platforms are an outright scam, and it is essential to know how to identify them to avoid falling for a scam. What can an investor do to avoid these scams? Choose only online brokers that are properly regulated. Throughout this tutorial we talked about Plus500, so let’s see if it is a scam or it is safe. In addition, the analysis of Plus500 will help us learn how to analyze the safety of a broker, if you decide to choose another trading platform.
– Plus500UK Ltd authorised & regulated by the FCA (#509909).
– Plus500CY Ltd authorized & regulated by CySEC (#250/14).
– Plus500SG Pte Ltd, licensed by the MAS (#CMS100648-1) and IE Singapore (#PLUS/CBL/2018).
– Plus500AU Pty Ltd (ACN 153301681), licensed by:
ASIC in Australia, AFSL #417727, FMA in New Zealand, FSP #486026; Authorised Financial Services Provider in South Africa, FSP #47546. You do not own or have any rights to the underlying assets. Please refer to the Disclosure documents available on the website.
Another important factor in the case of Plus500 Ltd. is that its shares are listed on the London Stock Exchange’s Main Market. Why do we think this is important? Because it ensures that the company is supervised and that its accounts must be audited. This makes it look like a reliable company. But if you want to see more platforms, there are others that we think also comply with the regulation requirement. Among them are AvaTrade, IG Markets, XTB, Markets.com or eToro, among others.
The second important factor when choosing a trading platform is cost. In the case of Plus500 there are no commissions, which we think is good news. In addition, the spreads for Forex CFD trading are very narrow. You should bear in mind that Plus500 spreads are dynamic, depending on the underlying asset, so it is not possible to do a detailed analysis. To this we must add that each currency pair has its own spread at any given moment, so it is not easy to do a comparison with other brokers. However, most reviews of Plus500 tend to agree that their spreads are low. So, if you want to see how Plus500 works and why it has no commissions click here (76,4% of retail CFD accounts lose money).
APPs and platforms
Some brokers, such as Plus500, have developed their own trading platform, and others use third-party platforms like the famous MT4, as in the case of brokers such as Markets.com. In addition, they all have their own apps for those who operate from a mobile phone. However, all their websites are responsive, which means that they work just fine on a mobile phone, and there is no need to download the app, if you don’t want to.
Another reason why we have chosen Plus500 as one of the best platforms is the rating of its app. For example, in iTunes, the rating of Plus500 is 4.3 stars out of 5, which we think is a very high score.
How to start
It’s time to conclude this guide to forex trading. As you can see, the possibilities of participating in the market are many and varied. One of them is through derivatives such as CFDs. If you want to start Forex CFD trading commission free with Plus500 click here (76,4% of retail CFD accounts lose money).