Have you been swayed by a commercial, online ad, or a trusted friend to dabble around the forex market and possibly even make it your full-time job? Before saying goodbye to your boss and buying multiple computer screens for your home office, here are things you ought to know prior to opening a forex account.
How good is your broker in terms of offering technical support when you encounter trading-related issues? How fast do they refresh price feeds and how many currency pairs do they cover? There are basically two kinds of forex broker – dealing and non-dealing desk. The latter is the more preferred option as it protects the trader’s interest. Dealing desks will trade on the other side of your trades, which may result in price manipulation and other tactics to protect their own interests.
Knowing microeconomic and macroeconomic drivers that move the market is crucial to positioning yourself wisely. You don’t want to be in the way of a free-falling currency pair because you failed to identify the slowing GDP rate in China or miss out on a pair that just skyrocketed because you didn’t see the US’ unemployment numbers.
Having a solid grasp of your numbers is of course an equally important aspect of trading forex. Start with basic indicators like moving averages and Stochastic’s oscillator. These are easier to understand than the more advanced forms of technical indicators, such as Ichimoku Kinko Hyo and Parabolic SAR.
Before opening a forex account, understand that it can be a toxic environment to work in despite being a home-based job. You will have to navigate across multiple price charts and a slate of economic news reports on a daily basis. You will also be looking at losing positions from time to time, which create further stress.
Before opening a forex account with your broker, understand these things first. You should also consider opening a demo account to gain firsthand experience of how the forex market operates.