How to Trade Forex in 2020: Strategies, Finding the Best Broker and More
Trading Forex can be very profitable, but getting started can be a daunting task.
The Forex market is the global currency exchange marketplace, with trillions of dollars’ worth of currencies being exchanged on a daily basis. Forex trading is widely considered to be the easiest and most accessible form of trading, as beginners can create an account with an online broker in a matter of minutes and begin their trading journey with less than $100.
It is especially attractive to individuals who are in full-time employment and are looking to generate a secondary income, as the Forex market is open 24 hours a day during the working week.
Forex Trading Strategies
There are several profitable trading strategies which are particularly popular among currency traders, many of which are intraday (meaning you open and close all trades within the same day, so you don’t carry any risk exposure into the next day.)
Scalping is one of the most popular and effective intraday Forex trading strategies.
It is employed by buying a currency, waiting for the price to move in a few pips in your favour after a few seconds, and then selling the currency for a small profit. Your profit per trade will be quite low, but scalpers typically make dozens of profitable trades per day, so these profits add up very quickly and can lead to impressive daily returns.
For example, if you employ this strategy with a spread betting account (spread betting is a form of trading which is tax-free in most countries and allows you to take advantage of leverage) with an online broker and close 20 profitable 5-pip trades per day at £10 per point, you’d make a daily profit of £1,000 (around $1,270.)
However, you are likely to have a few losing trades on a typical day when scalping which eat into your profits. This leads us on to our next point – it is imperative you cut your losses short when using this trading strategy and then focus on the next trade.
As long as you are disciplined and take a methodical approach, scalping is certainly an effective trading strategy and is very well suited to beginners who are keen to start their trading journey.
Picking the Best Broker
Choosing the right broker can play a pivotal role in whether or not you end up being a successful trader in the long run. Using a trusted online broker with a powerful trading platform, fast pay-outs and advanced trading signals/indicators pull the odds in your favour and put you in a much better position than most novice traders. READ: Trading vs Investing: What’s the Difference? IG Index is a leading fully FCA-regulated trading platform. Headquartered in London and listed on the FTSE 250 exchange, IG Index is one of the most popular online trading platforms available, serving retail traders in dozens of countries all over the world.
They offer three types of trading accounts:
Share dealing – This account allows investors to purchase stocks and other assets with low transaction fees.
CFDs – Contracts for Difference (CFDs) trading works in a similar way to spread betting, but is often less tax-efficient and more complex to understand.
Spread betting – A spread betting account allows you to generate tax-free returns (in many jurisdictions) and benefit from leverage, which essentially means you can place larger trades with a relatively small balance (just a few hundred dollars).
Why Does Equities Daily Recommend IG Index’s Spread Betting Account?
IG Index is one of the most established brokers globally.
They are regulated by the Financial Conduct Authority (FCA), so they have to follow stringent rules to protect your money.
They have some of the lowest trading fees in the industry, across all asset classes, including crypto, Forex and bonds.
You can sign up for a live or demo trading account with them for free, in a matter of minutes.
They give traders access to thousands of different assets, including bonds, stocks, commodities and currencies.
You can limit your maximum loss on individual trades with IG Index by setting a stop loss via their platform.
Equities Daily is a financial news site and educational hub which aims to help ordinary people make money online.