Forex Trading

After the 1970s, when the United States abandoned the Bretton Woods agreement regarding USD convertibility into gold, the foreign exchange market expanded dramatically. Initially accessible only to institutional players due to high transaction costs and limited access, everything changed with the advent of the internet and online trading. Forex brokers made it possible for retail traders to participate in the largest financial market in the world.

A forex broker serves as an intermediary between the trader and the market. It provides market quotes through various liquidity providers, and its trading platform reflects the best possible conditions for its customers. In return, the broker charges a fee or commission, aligning its interests with those of the trader.

Brokers can be organised as either dealing desks (market makers) or non-dealing desks. A dealing desk creates a market by mirroring quotes from the interbank market and offering those prices to its clients. Non-dealing desks route their clients’ orders directly to liquidity providers, ensuring the best quotes are sourced from the liquidity pool for retail clients.

Non-dealing brokers often provide dTrader (Electronic Communication Network) or STP (Straight-Through Protocol) execution. However, some brokers operate as hybrid entities, combining dealing and non-dealing conditions.

Depending on the type of brokerage, different account types are available. Trader Accounts and STP accounts are two common examples.

Because the forex market consists of currencies from across the globe, predicting exchange rates is challenging due to the numerous factors that constantly influence prices. The primary driving forces behind these movements include central banks, news reports, and market sentiment. Gaining an understanding of how each of these factors operates will greatly aid you on your trading journey.

It’s also crucial to remember that prices fluctuate based on supply and demand, much like any other financial market. As a forex trader, you’ll likely choose to invest in an economy with strong growth potential or short a market with weaker prospects.

Whether you’re new to trading or have years of experience, defining your success is crucial to becoming an expert trader. Reflect on what you aim to achieve and how you personally define success in trading.

Setting clear, measurable goals is vital. It’s advisable to set long-term targets, such as annual goals, rather than focusing on short-term objectives like monthly targets. Once you’ve outlined these factors, you can put your action plan into motion.

Regardless of your experience level, it’s essential to manage your expectations throughout the forex trading process and maintain control over your emotions. To become a successful trader, you need to thoroughly understand the mechanics of the forex market, trust your analysis, and adhere to the rules of your trading strategies.