If you are new to the financial markets, it stands to reason that you would be attracted to the foreign exchange.
After all, this market sees an estimated $5.3 trillion traded globally every single day, while the niche boasts a total value that’s approximately 2.5-times larger than the world’s cumulative GDP.
However, this highly liquid and leveraged market is also incredibly volatile, while its margin-based nature means that you can lose far more than your initial investment. Given this, and the fact that you can now access the markets readily on your smartphone, it is important to approach the market with caution and follow a number of key steps!
1. Understand the Pros and Cons of Margin
The terms ‘margin’ and ‘leverage’ are commonly used in the world of forex trading, and both are interlinked with one another.
More specifically, leverage refers to the use of borrowed capital as a funding source when executing trades and is essentially an exercise in taking on debt, whereas margin is utilized as a way of creating leverage in the first place.
Understanding this relationship is key, as is the pros of understanding how trading with significant sums of borrowed cash can inflate your margin and trigger outcomes that are far greater than your capital base.
So, it is important to remember that margin can trigger huge losses as well as impressive gains, and factor this into your strategy as a forex trader.
2. Use a Mobile Trading App
With the development of modern technologies, we can do almost anything via the smartphone. Mobile trading is gaining high popularity, as you can have access to trading platforms from anywhere in the world.
Smartphones have changed the way people trade, as they have become a big part of our lives. Despite checking the trade market on the go, traders can now be included in the global market.
If you’re going to trade on your smartphone (which the majority of traders now do), it’s important to download a regulated and viable mobile app that optimizes your chances of success. Be sure to pick a proper app that allows you straightforward use, access to crucial information, and data protection.
Some might question the security of this kind of smartphone apps. However, keep in mind that trading apps use modern software to protect users and allow a steady flow of trade. You won’t have to worry about your personal data being shared with third parties.
The benefits of using a smartphone to trade are numerous, including the retention of real-time access to the market and the ability to generate real-time insight through a comprehensive suite of analytical tools.
Trading apps offer a user-friendly app design that allows traders to track the ups and downs of the market easily. Also, they can check the market by different categories to find the one that they are interested in. The easy access to crucial information allows the traders to always stay up to date with the current situation on the market.
However, leveraging these benefits relies on your ability to identify the best licensed app around, although the MetaTrader 4 platform is the most popular option amongst traders. This is also compatible with a number of brokerage sites, so keep this in mind when looking for a trading platform.
3. Use a Demo Account
When you trade through this type of platform or app, you will see that you’re able to use a so-called “demo account” for a temporary period of time. This option is available within all the trading apps, in order to get you introduced to the real feel fo trading.
This essentially provides an authentic and real-time simulation of your chosen market, while enabling you to trade without risking your hard-earned capital. It will also help you improve your trading skills and come up with the right strategy that you will benefit from.
As a result, an opportunity is created to hone your trading strategies and grow accustomed to mobile trading in a risk-free environment, enabling you to optimize your chances of success and minimize risk when investing for real.
Traders that aren’t sure if mobile trading is the right choice from them can now go for a demo try.