What is Forex (FX) trading?
Online trading has made market investment a reality for anyone with a computer, a reasonably good financial history and enough money to open an account. Although this has made trading more accessible it is still vitally important that you understand the marketplace before starting to trade.
What is Forex trading?
Learn the trading language
Online trading may seem overwhelming at first. Investing is full of jargon with many new and strange terms to learn. To get started it is a good idea to learn the basic terminology. Websites such as Investopedia and InvestorWords will give you a good grasp of the online investment lingo so that you know your hedging from your diversification.
Determine your investment style
Before you start to invest online, you need to determine how much you can invest and what type of investments you would like to make. There are several online tools that can provide you with an insight into the types of investments you should be looking at by identifying what type of financial investor you are. Click through on the links below to find out more.
1) Vanguard’s Investor Questionnaire
2) Index Funds Advisors Risk Capacity Survey
3) SmartMoney Asset Allocator
Choose an online brokerage firm
Your online broker needs to execute your trades and store your money and stock in an account.
Before choosing an online broker you need to decide:
• How much money you plan to invest
• How frequently you plan to make trades
• Your level of trading experience and how much guidance you need
• Any other information / advice / services you may need. Some online brokers like CMC Markets for example provide on-going specialist seminars and training for their customers.
Online market monitoring
As an online investor it is vital that you stay at the forefront of the latest financial news. In order to make informed decisions you will need to remain constantly up to date with the latest market movements and any news that has the potential to affect stock prices. You will also need to be able to access company’s financial statements and regulatory filings.
It is a good idea for any trader to set up the website sources that you will regularly need access to as favourites on your workstation so that you have all the latest information at your fingertips.
Reduce your investment risk
It is fundamentally important to research the sector, business and financial statements of each company whose stock you plan to purchase. This, alongside becoming educated in diversification and basic portfolio theory, will assist to alleviate some of the risks associated with the volatility in both the stocks and the stock markets.
Decide your trading platform
This platform will act as the hub, allowing you to purchase and sell securities (fixed income and equities), options, mutual funds, CFDs and foreign exchange.
The platform should include helpful tools which are necessary to trade profitably such as:
- Tracking and monitoring portfolios
- Researching tools
- Charting tools
- Real-time streaming quotes
- Up-to-date news releases
Often, more robust research tools are also available such as full, in-depth analyst reports and analysis, and customised back testing and screeners which show how particular investment strategies would have been realised during different historical periods.
Placing your first trade?
http://www.cmcmarkets.com.sg/cfd/get-started/placing-your-first-trade
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