After a novice trader has registered and created a personal account, an important question arises – what tools for Forex trading are better to use, and what trading strategy to follow in order to quickly make a profit. A common mistake for beginners is an attempt to open deals on the first currency pair that comes across, hoping for luck and good luck. Such errors usually result in the loss of the deposit. To build an effective and reliable strategy, a trader needs to choose the most suitable trading tools forex brokers.
What are the Forex instruments
Most brokers offer clients a wide range of trading instruments:
- Currency pairs (including exotic ones).
- Bank metals (gold, silver, platinum).
- Stock indices (S&P, DAX).
- Cryptocurrencies.
- Other assets (oil, shares).
It is important to note that forex instruments are mainly traded in CFD mode. This means that the trader does not buy a real product (oil, gas), but only concludes a contract with the broker that the price will change in the direction chosen by the trader in the future. This allows you to have access to the most rare and exotic currencies and assets. But variety can hurt a beginner. Forex trading risks increase if a novice speculator has not perfected his trading skills for a particular currency pair. Opening a large number of random trades often leads to losses. The forex calculator offers comprehensive information on hypothetical trading. Input parameters include currency pair, contract size, account currency, leverage, commissions, spread and rollovers.
How to choose the right Forex instruments
In Forex, it is better to select instruments based on the following principles:
- Trading conditions and restrictions. Forex rules describe such concepts as instrument lot size, minimum and maximum lot, margin, swap. For many companies, trading in oil, gas contracts, and commodities is carried out with a large starting lot. This means that a newcomer, having opened such a contract, runs the risk of exceeding the leverage limit, which leads to losses or complete ruin. Before opening a deal, you should carefully study the trading conditions and make sure that the size of the deposit allows you to trade such instruments.
- Volatility. Some currency pairs are considered “calm” – their value can be in a narrow range for weeks. Other forex trading instruments are very volatile and can rise in price by tens of percent per day. Beginners may not know how to use indicators and technical analysis methods. Therefore, if the whole experience of a trader is that he has passed a forex training seminar, it is better to start by trading calm and predictable currency pairs.
- Availability of information and analytics. Forex trading (and even financial betting as its variety) is based on deep fundamental and technical analysis. To understand how the dollar / euro / pound exchange rate will change, the client must understand economic statistics, analyze the statements of the heads of national banks, ministers, and politicians. In this regard, when trading exotic currencies (Indian rupee, South African rand), it is more difficult to find fresh statistics and detailed analytics. And this increases the risks when opening deals.
Recommendations for working with Forex trading tools
For a stable and secure income, it is not necessary to use all the tools of a forex broker. Experienced traders can create an effective strategy for one or two currency pairs. It is better to start with the most popular assets: euro / dollar, dollar / yen, gold contracts or stock indices. Beginners are advised to hone their trading skills without unnecessary risks, first using demo and cent accounts.
All forex tools differ both in technical terms and in analysis methods. Beginners should carefully study the trading conditions of the company and take into account the advice of experienced colleagues.
Every trader has bad days and losing trades. If the order went negative, you should fix the loss and calmly find an error in the analysis. The worst decision is an attempt to win back losses by switching to risky and volatile instruments. In this case, the risks increase, and the trader who has fallen into excitement, instead of a thorough analysis, starts playing the lottery, which reduces his chances to a minimum.
conclusions
Forex brokers’ tools can be divided into the following types:
- Major (base) currency pairs.
- exotic currencies.
- Valuable metals.
- Commodities.
- Shares and stock indices.
Basically, forex tools are provided in CFD mode, which allows the trader to make transactions in any direction and with a fairly significant leverage.
At the same time, each instrument has its own characteristics: lot size, conditions and restrictions of the brokerage company, quotes behavior, optimal analysis methods. It is better for beginners to hone their skills on one or more instruments, since no trader can analyze all charts and quotes at the same time.
