Forex Basics

20 (More) Quick Answers to Common Forex Trading Questions

We’re back again! This time with twenty more simple answers for very common questions related to Forex trading. If you haven’t yet read our first twenty, we invite you to check that article out! Now let’s get to it…

Q1: How many people trade forex?

A1: It is estimated that there are around 10 million traders in the world, with the number growing higher every single day.

Q2: Why do so many traders give up?

A2: Most traders walk away because they have unrealistic expectations and realize that they won’t get rich overnight or because they blow their account balance due to trading with no idea of what they’re really doing. 

Q3: How much money can you make as a forex trader?

A3: This depends on a variety of factors, including the amount of money you’ve invested, your trading plan, how educated you are, how much time you have for trading, etc. 

Q4: What are the best currency pairs to trade?

A4: Many traders stick with major currency pairs, while EURUSD, GBPUSD, USDJPY, USDCHF, and AUDUSD move most often. Gold (XAUUSD) is also very liquid. 

Q5: Which forex pairs are the most volatile?

A5: GBPJPY, AUDJPY, and NZDJPY (currency pairs with the Japanese Yen).

Q6: Is it hard to learn how to trade?

A6: While some claim that trading is difficult, we would say it is simply more time consuming to learn everything you need to know. Those that just want to make money with little effort often walk away because they do not want to invest the time needed to learn what they need to know. 

Q7: Are demo accounts rigged to convince you to open a real account?

A7: Conditions on demo accounts are not rigged. However, some traders get better results on their demo accounts because real-world emotions are not involved. Things change when real money is on the line. 

Q8: What percentage of traders lose money?

A8: Every trader loses money at some point, but an estimated 20% wind up losing money when you’re talking about the big picture. 

Q9: How can I limit the amount of money I lose trading?

A9: You’ll need to practice risk-management by setting a stop loss for your trades, monitoring your position sizes, etc. Also, be careful when using high leverages. 

Q10: How do I know when I’m ready to open a trading account?

A10: Start by trading on a demo account and checking for consistent profits over time. You can also try taking quizzes online to test your knowledge. If you come across anything that you don’t know, be sure to look it up. 

Q11: How much money do I need to start trading?

A11: This depends on the broker you’re looking at, although many brokers offer very low entry minimums of around $1-$100. 

Q12: How much money does it cost to learn to trade?

A12: You can actually learn everything you need to know online for free, although you might want to participate in a paid course or spend some money for one-on-one training if you feel it is needed. 

Q13: What if they decide to ban trading? 

A13: While some countries don’t allow forex trading, it is highly unlikely that every single country would ever ban it. Some countries, like the USA, enforce stricter rules, but trading will never go away. 

Q14: Are there benefits to trading forex full-time?

A14: Trading is considered to be a great job because you can be your own boss, work from home, and take advantage of flexible hours. However, it does require self-discipline that some may not possess. 

Q15: Can I really rely on forex signals?

A15: This depends on whether the signal provider is reliable or not. Try to do research beforehand to check on the validity. 

Q16: Can forex robots make me rich?

A16: Some Expert Advisors do make money for you, but none of these systems can predict the market 100% accurately. You also have to be careful considering that most providers want you to pay for their systems and be very skeptical if something is “guaranteed” to make you money. 

Q17: Can the money I make trading be taxed?

A17: The answer differs based on the country you live in, so be sure to look this question up directly. 

Q18: How many brokers are out there?

A18: If you’re looking at regulated brokers, you’ll find more than 200 options, while there are thousands of unregulated brokers with new options opening every day.

Q19: What’s the best forex trading platform?

A19: In our opinion, MetaTrader 4 and 5 are the best, but this doesn’t mean you shouldn’t consider other options as well. 

Q20: Will trading always be available?

A20: Traders won’t have to worry about losing the opportunity to trade forex because it isn’t going anywhere – ever. You’ll be able to trade until the end of time so don’t let this stop you from opening an account. 

Forex Basics

20 Quick Answers to Common Forex Trading Questions

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. 

Forex Basics

Top 7 Frequently Asked Forex Trading Questions Answered

If you Google “forex trading questions”, you’ll find many different common searches from those that are curious about the field. Today, we thought we’d provide some answers to some of the most commonly asked questions about trading. 

Question #1: Can I trade forex with $10?

The short answer to this question is yes! However, there are a few things you need to know. First, you’ll have to find a broker that will allow you to open an account with this amount, but this shouldn’t be much of a problem as more and more brokers are offering entry-level accounts that don’t require a large investment. You’ll also want to have realistic expectations about how far your investment will get you. It’s true that your $10 can grow into more money, but you shouldn’t expect to become rich off of a small investment. Still, there’s nothing wrong with starting small and working your way up.

Question #2: Is it Worth Becoming a Forex Trader? 

This depends on how much time and effort you’re willing to invest in trading. Those that are looking for an easy way to get rich with little effort will probably tell you that forex trading isn’t the answer. On the other hand, if you’re determined and ready to learn, trading can be a profitable and sustainable source of income that can help you today and even into retirement. 

Question #3: How Much Do Forex Traders Make a Day?

The answer to this question is quite subjective. First, you have to consider the amount of money you’ve deposited, your overall experience, your strategy as in how often you trade, and so on. Someone with a small investment and little experience just isn’t likely to make as much as an experienced trader with a sizable investment. One common article found that a trader that makes 100 trades per month with an initial investment of $30,000 could make around $3,750 a month. While it would be difficult to replicate these results exactly, this can provide a general idea of how much you could make. 

Question #4: Is Forex Trading Just Gambling?

Not at all. When you’re gambling, you rely on things like luck and probability and you’re likely to take big risks in order to win big. Forex trading is different because you actually enter trades based on supporting evidence. Rather than simply entering trades for no reason, you work with a detailed trading plan and use mechanisms to limit the losses you could take. You can also look at things like the news and current events to have an idea of what to expect. 

Question #5: How Long Does It Take to Learn Forex?

The answer to this is subjective, as it will depend on how much time you can invest in learning per day and how fast you learn. Many traders also continue to learn lessons long after they’ve opened their trading account. If you’re eager to get started, the best thing you can do is carve out some time each day or longer blocks of time on the weekends for researching. 

Question #6: How Safe is Online Forex?

This depends on the broker you’ve chosen. While there are scammers out there, there are also many reputable brokers that want to help you. Finding a trustworthy option only requires some time researching. You can start by reading over everything on their website, including their terms & conditions, checking their regulation status, and looking online for honest user reviews on other websites. If you can’t find much information about a particular broker, go with a more popular choice. 

Question #7: Does Forex Trading Have a Monthly Fee?

This question likely stems from the inactivity fees that are charged by some brokers. These fees are typically charged in amounts anywhere from $10 to $30 or more after so many days go by without any trading activity on the account. Most brokers don’t charge this fee, but the best way to check is to read your broker’s terms & conditions and to check their website for a page related to their fees. While inactivity fees aren’t always charged, brokers do make money by increasing the spread and charging commissions.

Beginners Forex Education Forex Basics

Answers to the Most Googled Forex Trading Questions

If you’ve ever used Google to seek out answers to your Forex trading questions, you’re certainly not alone. Here, you’ll find some of the most frequently asked questions that traders put to Google, as well as the answers.

Question #1: What is Forex Trading?

Traders buy and sell currencies through the foreign exchange market. Currency rates are predetermined by a variety of factors, such as political stability, government debt, news releases, and other driving factors behind that country’s economy. Traders try to capitalize off these prices essentially by selling one currency to purchase another.

Question #2: Is Forex Trading Profitable?

The answer to this question is yes, although it is subjective. Someone that makes a larger deposit is likely to make much more money and having an education and understanding of trading also helps one to make profits. In some cases, traders can lose money as well, so be sure that you’re ready before you start.

Question #3: How to Trade Forex

Once you’ve educated yourself about forex trading, you’ll need to choose a broker and make your first deposit. There are a lot of resources online that will teach you the mechanics of using a trading platform (especially the popular MT4/MT5 options). Ensure that you are familiar with the things that affect prices and other trading knowledge first. 

Question #4: What Do you Need to Trade Forex?

The good news is that it doesn’t take much to get started and essentially everyone can become a forex trader if they apply themselves. You need a device like a phone, laptop, tablet, etc., a working internet connection, a trading account, and a starting deposit of at least $5-$100. 

Question #5: Which Broker Should I Use?

There are thousands of forex brokers out there, which makes choosing the right one so much more difficult. The truth is that every trader has different needs, so what’s best for one trader may not be the right fit for another. The best thing you can do is figure out how much you want to deposit and then to compare account options with multiple brokers. Check for regulation status and read user reviews online, along with checking terms & conditions to find the broker with the best offer.

Question #6: Will Forex Trading Make me Rich?

It could. This depends once again on several factors. A well-educated trader with a solid trading strategy and plan is likely to be successful, while someone that jumps in without much knowledge isn’t likely to make it far. This isn’t something that will make you rich overnight, it does take a lot of hard work and patience to get there. You also have to invest money to make money, so don’t think of forex trading as a magic answer.

Question #7: Can you Make a Living Trading Forex?

Many people have managed to quit their jobs to become full-time day traders and the switch comes with some benefits like working from home and being your own boss. Everyone needs a different level of income to survive, so the first thing to do is to figure out how much you would have to make enough money. If you’re just beginning, it isn’t a good idea to quit your job yet, however, you should give it some time to see how well you do. You also might need to make a significant investment in order to turn enough profits.

Question #8: How Much Should I Invest?

This depends on how much money you’re trying to make and how comfortable you are with trading. You might not want to start out with a $5,000 investment just because you can. There are a lot of different minimum deposit requirements out there, some starting at just $5 and some brokers don’t require a minimum at all. You could start small and test the waters or come in with a big investment if that’s what you’re comfortable with. 

Forex Psychology

5 Questions Every Forex Trader Should Ask Themselves

Each and every Forex trader needs to not only create a trading plan and select his or her strategies but also need to prepare a money management plan, select a broker, and more. Answer these self-assessment questions to ensure that you’re on the right track.

Question #1: How Much Do I Want to Risk?

The amount of money that you’re willing to risk when trading might vary from one trade to the next, however, many professionals keep their risk percentage to 1-2% of their account balance per trade. Some might suggest basing how much you risk by looking at how much money is actually involved, although this comes down to personal preference. Risking too much can lead to a blown account balance, so be sure to give this one a lot of thought.

Question #2: Did I Choose the Right Broker?

You’ll probably form an opinion of your broker soon after opening an account. Once you need to chat with customer service about possible issues or with questions, test out the broker’s chosen platform, get a look at their fees in real action, and gain insight into any difficult policies you will either feel satisfied with your choice or feeling as if you could do better. If you think you’ve chosen a bad broker, you might want to withdraw your funds and go with another option. Of course, this is something you’ll need to seriously think about.

Question #3: Am I Really Ready to Start Trading?

If you haven’t been trading for long or haven’t started, you should definitely ask yourself whether you’re really ready. If you’ve already opened a trading account, you know whether you’re making or losing money. If you’re only considering opening one, you might not be sure if you’re ready. A few good ways to test this before risking any real money would be taking forex trading quizzes that test your knowledge or gaining hands-on practice through a demo account.  

Question #4: What Are My Goals?

Sure, making money probably seems like the biggest goal for a forex trader, but you need to start with smaller, more defined goals. Remember that it isn’t all about getting rich. For example, a noteworthy goal would be to make more money than you lose, rather than to become rich. To grow as a trader and to bring in slightly more profits each month would be another good example. If you set goals like these, you’ll feel more accomplished as you meet them. 

Question #5: Do I Have a Plan?

A trading plan is one of the first things a trader should develop because they provide a general outline of goals, risk tolerance, and a host of other things that should be taken into consideration. If you started trading without a plan, don’t worry – it’s never too late to come up with one. Still, it’s important to put this plan together as soon as possible and to actually follow it while trading, rather than forgetting about it.