So we have understood that the forex became available to private traders a comparatively short while ago. That has everything to do with the technological innovation triggered by the internet, making a multitude of advanced trading computer software available to people with a common, home computer, enabling them to connect directly online with the trading terminals of banks and brokers.
Up to fifteen, even ten years ago, the currency market was the special playground of banks, governments and large, institutional players. Major, international banks traded directly with one another through sophisticated trading methods (as they still do these days), as the rest, including smaller sized banks, bought and sold currencies through those major banks.
Online Trading Platforms
The massive change emerged when banks and brokers began providing online trading software retail, to individual traders. Due to ever speedier internet connections and computers, large numbers of online financial data could simply be streamed to the common computer and the other way around, connecting individual traders to the financial markets in real time.
What's most crucial when choosing a broker is a secure, quick trading platform, that features ample options to modify your positions. Having the ability to put in a stop loss and profit target is typical on all trading platforms, but that's far from the truth for options like limit orders (which will exclusively trigger once the currency pair reaches up to a particular price level) or trailing halts (stops that move with your position in the event the trade moves in your direction).
Quite a few traders also think it is increasingly essential to have easy access to the trading platform regularly, be it with a various computer at home, at work etc via a web trader, or with a smartphone or tablet. It's therefore a good idea to choose a broker that also provides a web version of its software (java based, making it also ideal for Apple computers) along with mobile apps and tablet apps.
Another fundamental development these last few years has been the spike in freely available technical trading software. Technical analytical signals could only be determined manually by traders before the 1980s.
Later developed software that automated the job only became obtainable to professional dealing rooms in the years following that. However, during the past decade they've come within easy reach of everyone.
Today, even after opening up just a demo account, the majority of forex brokers will offer you innovative technical trading devices that until just recently had only been available to well compensated professional traders.
A word of advice though: don't lose yourself too significantly in the use of technical signs. You really don't have to implement 20 unique indicators to come up with a effective trading strategy. Experienced traders will tell you that only several the most renowned technical indicators will be enough as tools for a working trading strategy.
Start off With A Small Trading Capital
Back in the day of retail currency trading, the lowest lot size for individual traders was 1 Standard Lot, which represents 100,000 currency units. Using 100:1 leverage the maximum leverage in those days you wanted $1,000 to buy 1 Standard Lot EUR/USD. Even using 400:1 leverage the current maximum leverage many brokers supply to traders outside of the United States you'd still need to have $250 to open one Standard Lot position. With 1 pip being about $10 , trading on the forex typically stayed at a proposition too expensive for small-scale, private traders.
That adjusted when the so called Mini Lot was released, which is one/tenth of a Standard Lot. 1 pip is valued at only $1 in a Mini Lot, and by utilizing 400:1 leverage you only need to have $25 to open one position.
Not long ago, an even lesser lot size was introduced by many brokers, the Micro Lot. This – as you possibly suspected is one/hundredth of a Standard Lot, with a pip value of 10 dollar cent.
All this indicates that when you need to start out simple as a forex beginner which would be the wise thing to do several hundred dollars will be enough when trading Micro Lots. Simply because 1 pip is worth only 10 cents with micro lots, you'd control 2,000 pips having a trading capital of just $200.