Before talking about Online Trading for beginners, let’s start with the necessary basics, let’s define what Forex (Foreign Exchange Market) is. It is necessary to mention that there is a risk with trading any financial product or asset.
Because of its very nature risk is variance in your return. If there is a possibility to make money there is also a chance to lose money. Forex or FX trading has been around for many years and is actually the world’s largest and most liquid market.
Forex trading involves making a prediction about how a pair of currencies will move relative to each other. Thanks to the ease of the internet, practically everyone is able to access an online broker. Which in turn will allow them to make trades in the Forex market.
Some brokers even use incentive-based marketing “strategies” to attract new clients with campaigns. Campaigns like “if you open an account with me I will give you $500”. Clients should be aware that there is no free lunch…
Traders try to buy, sell and make a profit from it. But you need to remember that the reality is not all trades will be profitable. If someone offers you a deal that seems too good to be true. It may not be such a good deal after all.
Related: How to Trade Forex With Tradeview
Different Types of Trading
To start trading in Forex, it must be borne in mind that you need to educate yourself about the basics of the market. Become prepared by creating a trading plan and knowing your own risk tolerance.
Like any business, such as a cafeteria, a barbershop, etc. It takes time to develop skills and become good at something. Thankfully most brokers offer demo or practice accounts. Where you can start to place trades without the risk of loss if a trade doesn’t work out.
Risk has always been involved with trading, Online and Offline for online trading for beginners as well as seasoned traders.
But taking the time to learn about a market and develop a plan will help you control such risk. It is never a good idea to enter any venture without at least a basic understanding and plan to gain experience and improve your skills.
I wouldn’t rent a pair of skis and head straight to the top of the mountain. Just like buying scuba gear and jump into the sea without an instructor. The same is true with trading. You might get a lucky break that keeps you afloat for a while but being lucky never lasts.
Sadly, many people end up being convinced that by simply being in Forex they will already achieve their goals. Without putting in work to develop their knowledge.
This is not true and you should be skeptical of anyone that says trading can be easy. Or that you don’t need to spend some time learning about what you will be trading.
The Advantages of Online Trading for Beginners and Seasoned Traders
There are a number of advantages to trading. Since there are currently savings and many traditional investments are offering little to no return in the current low-interest-rate environment.
Trading offers a method to profit from the market as there are trading strategies that behave independently of how the market moves. A trader can decide what direction they believe the price of an asset will move and position themselves accordingly.
To be a successful trader one must consider different variables. If the market rises, falls, or if it is within a range. Online Traders must be clear about their entry positions and calculate the profit and loss margins. Since they are always probabilities and you must identify which ones are the best in relation to your risk tolerance.
The profitable trader manages to reach objectives that are set month after month. And avoids becoming too greedy and exposing themselves to excessive risk. This will depend on each individual and the capital that can be allocated to the online trading account as success will depend on the goals and risk tolerance of each trader.
Trading a 1,000 USD account compared to a 100,000 USD account is not the same. Likewise, it is very important to choose the best broker for you in the market since there are many to choose from.
It is not always the easiest process to decide on a broker. The key is to choose a broker that suits your needs and always supports you throughout the process. From deposits, customer service, withdrawals, etc. You have to be careful when deciding since there are many brokers in the market. And some of them operate in jurisdictions where they do not have the minimum regulation required for what one needs.
Now, before selecting a Broker, several factors must be taken into account. Mainly reinforcing the main function of the Broker. Which is to guard your capital, provide you with market access, quality service, and support in your language.
It is very important to choose the best Broker for you, since it is your access to the market, in other words, you need to find someone who is your ally. There are two main groups of Brokers, DEALING DESK (DD) and NON-DEALING DESK (NDD) Brokers
Dealing Desk (DD):
DD Brokers function as market makers. The term market maker is used because these brokers usually take the opposite side of traders’ trades. They profit from their spreads and by providing liquidity.
They usually will try to find an offsetting order to match one client’s long or short order with an order from one or more of their other clients, before taking the other side of the trade themselves or finally sending it into the broader market if they can’t make a match themselves.
DD Brokers have a reputation to offer artificial quotes and fill orders on a discretionary basis. Where many feel they are not offering the best execution all of the time…
Generally, this type of broker will be the ones that saturate social networks with advertising or “offers” to attract more customers and this is done through promotions such as “come and trade with us and we will give you a $500 bonus in your account“; I personally suggest you stay away from this type of broker, as they can bet problematic.
Non-Dealing Desk (NDD):
Their main advantage is that they are not functioning as market makers so they send transactions directly to the market. Also within this group, we have two main types, ECN (Electronic Communication Network) and STP (Straight Through Processing).
ECN Brokers create a network between their clients and their liquidity providers (large financial institutions, banks, other brokers, etc.) ECNs offer the best spread available and provide more market depth by interconnecting with a greater number of participants.
STP brokers send the operations that you request directly to their liquidity providers. The orders are executed immediately by electronic means without any manual intervention.
These types of brokers are very good since they are always on your side, they win if you win since it is convenient for them that you continue trading online, and if you lose money, you would stop trading, this type of broker makes some of its profit through the Spread.
Online trading for beginners or seasoned clients choosing Tradeview they should be aware that it is an ECN connection so that you do not have shifting prices, with any sort of trading such as currencies, cryptos, or stocks. This should help give you the confidence that your broker will always be on your side.
The security of your funds is also a prime concern and Tradeview excels here. Some of my clients in Mexico comment that what attracts them the most about Tradeview is the speed of deposits and withdrawals since they are working with national and international banks as well as other quality payment providers. This makes the process much easier since to deposit or withdraw we are talking about a simple SPIE.
This is a transparent process and most Mexicans are familiar with this and at the same time makes it quite friendly for all the public, both beginner and experienced traders, which helps us to establish a long-term relationship.
For clients in other countries there is a similar process for deposits and withdrawals that eliminates some of the stress that can happen with sending money to your broker.
Senior Market Analyst