Beginner’s Guide to Online Forex Trading – Chapter 6: Basic Requirements to Start Forex Trading

This is chapter number 6 out of 17. Read the rest:

Read The Complete Beginner’s Guide to Online Forex Trading – Chapter 1: What is Forex?
Read Beginner’s Guide to Online Forex Trading – Chapter 2: What is done in a Foreign Exchange market?
Read Beginner’s Guide to Online Forex Trading – Chapter 3: Currencies and the Market Opening Hours
Read Beginner’s Guide to Online Forex Trading – Chapter 4: Why so many people are interested in trading in Foreign
Read Beginner’s Guide to Online Forex Trading – Chapter 5: How To: Trade Forex

Not much. All you need is a computer provided with a high-speed Internet connection and understanding fully the information provided in this guide to start trading in currencies.

One needs to have an online currency trading account. There are two types of accounts: Micro Account where an initial deposit of $1,000 is advisable. For a Mini Account it would be advisable to start with $10,000.

Funds Required:

Margin trading is a common word used in “trading”. In simple language it means trading with borrowed capital. This method of trading enables one to open positions of huge amounts like $10,000 to $100,000 with small amounts ranging from $50 to $1,000. In short, margin trading enables one to carry out large transactions with very low initial capital. Margin trading in the Forex Market is quantified as “lots”. The term “lots” can be defined as the minimum amount of currency one has to buy. When you decide to “close” your position (meaning completing your transaction – buy & sell), the amount originally invested by you for that particular transaction is credited to your account. Subsequently the profit/loss calculation is done and accrued amount is credited/debited to your account.

Rollover:

Rollover means you carry over your trade to the next day. For this one has to pay or earn interest, which is related to one’s established margin and position. In order to avoid the roll over interest, all your positions should be closed before the end of that particular market day i.e. 5:00 pm EST.

Rollover Interest is a fundamental part of Forex Trading. Every currency trade involves borrowing of one currency to buy another. One pays interest on the currency one has borrowed whilst earns interest on the currency that is bought. If the difference between the two interests is positive, one earns interest or vice versa. It is suggested that you seek more specific information on this aspect from your broker.

Demo Trading:

Almost all Forex brokers allow their potential clients to open a free demo account. This is a “Virtual” account with all “Real-time” features. This account is offered “Free” so that a potential client can learn the ins and outs of Forex Trading without taking any risk. This works as a perfect Tutorial for the Client, generating interest and confidence to go in for Real time Forex Trading.

It is also suggested that you familiarize yourself with “PIP” values and how Profit/Loss is calculated before venturing into Forex Trading. We recommend you practice on paper or using online demo accounts for at least 6 months before  you jump in with real money.

Read Beginner’s Guide to Online Forex Trading – Chapter 7: Forex trading Necessities
Read Beginner’s Guide to Online Forex Trading – Chapter 8: What is?
Read Beginner’s Guide to Online Forex Trading – Chapter 9: Technical Analysis
Read Beginner’s Guide to Online Forex Trading – Chapter 10: Foreign Exchange Market Orders
Read Beginner’s Guide to Online Forex Trading – Chapter 11: Choosing a Forex Broker
Read Beginner’s Guide to Online Forex Trading – Chapter 12: Tips on Trading Forex Online
Read Beginner’s Guide to Online Forex Trading – Chapter 13: How to Open a Forex Trading Account
Read Beginner’s Guide to Online Forex Trading – Chapter 14: Forex versus Futures
Read Beginner’s Guide to Online Forex Trading – Chapter 15: Forex versus Stocks
Read Beginner’s Guide to Online Forex Trading – Chapter 16: Terms used in Forex Trading – what do they mean?
Read Beginner’s Guide to Online Forex Trading – Chapter 17: Conclusion