Without a doubt, the topic of Forex trading brings with it many questions. There are questions related to strategies, brokers, fund management, and much more. Here, we’ll answer many of those questions for you in a clear and concise manner. Watch for a follow-up with additional questions and answers to come soon after!
Q1: What is forex?
A1: The term forex refers to the foreign exchange market, where traders buy and sell currency pairs in an attempt to make a profit.
Q2: How do you start trading?
A2: You’ll need to find an online broker, open a trading account, and make your first deposit.
Q3: How do you learn to trade forex?
A3: The internet is filled with resources, from articles and courses to videos, seminars, webinars, and more interactive options. Try starting with a google search for “beginner trading courses” and go from there.
Q4: What drives the price in the forex market?
A4: The price is driven by multiple factors, including economics and geopolitical factors. Central banks, politics, disasters, wars, and other news events have a huge impact on the forex market.
Q5: Isn’t trading the same as gambling?
A5: Trading is different than gambling because you’re using real information to make informed decisions about what and when to trade. It’s true that you can’t predict what the market will do with 100% certainty, but trading decisions are much more structured than gambling.
Q6: Is it legal to trade forex?
A6: In some countries, like North Korea, Israel, France, etc., trading is illegal. It is legal in the US as long as your broker is regulated and is legal in most other countries.
Q7: Can you make money trading forex?
A7: Absolutely, so long as you know what you’re doing and you have a solid trading plan behind you.
Q8: Do you have to be rich to get started trading forex?
A8: You can actually open a trading account with as little as $1 to $100 through some brokers. Just remember that the amount you make does depend on how much you invest.
Q9: Is trading really worth it?
A9: If you’re willing to invest your time into trading, it can be a great way to earn extra income or even to support yourself or your family, especially in retirement.
Q10: When do the forex markets open and close?
A10: The market opens at 00:00 GMT on Monday and closes at 00:00 GMT on Saturday.
Q11: What pairs should you trade?
A11: This is a personal decision, although beginners might want to start with major currency pairs like EURUSD, GBPUSD, and so on.
Q12: Do brokers scam people?
A12: Some do, but there are many trustworthy options out there. This is why it’s important to do accurate research before choosing a broker.
Q13: What kind of people trade forex?
A13: Many forex traders are simply regular people with smartphones or laptops. You don’t have to be a billionaire investor to do it!
Q14: What is leverage?
A14: Leverage allows you to trade with much more money than what is actually in your trading account. This can help you grow your account balance quickly, but leverage is often the downfall of many beginners that don’t know how to use it safely.
Q15: Why does trading get such a bad reputation?
A15: Many people rush into trading without proper education and lose their money quickly. This can be avoided if you educate yourself and start with a plan and realistic expectations.
Q16: What’s the best forex broker?
A16: You’ll have to decide this for yourself but do know that more popular options tend to be safer. Try looking online for articles that outline some of the best brokers out there.
Q17: How many trades should I make per day?
A17: As many as you want, but you’ll want to avoid overtrading. Different strategies call for a different amount of trades to be entered, so this varies widely.
Q18: Is forex a 24-hour market?
A18: You can trade 24 hours a day from Monday up until Friday night at midnight.
Q19: How will my broker make money?
A19: Your broker makes money by charging you commission fees and through the spreads that you pay when you make trades.
Q20: Can trading make me rich?
A20: It can, but you’ll need to invest time and money into trading if you want to get rich. This isn’t something that can be done with no effort – but it is an achievable goal for those that are determined.