The Ultimate Forex Trading Guide For Beginners UK

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Let’s assume you already know what Forex is and love how easily it can help you make some quick bucks! And why not? Afterall, it’s easy to speculate on currency price movements. Adding to it, the considerable returns are enough to attract anybody!

Many people desire to earn money in the Forex market, but few people are willing to put in the effort required to become effective traders. As a result, while trading Forex has grown several folds due to the ability to trade online, most new traders around the UK continue to lose money.

Ever wondered why?

The answer is simple: most traders have never had prior experience or took the time to learn to trade Forex in the UK. Other factors include:

  • Unfamiliarity with the market.
  • Lack of trading capital.
  • Failure to trade according to a strategy.
  • Failing to use basic money management procedures to help safeguard the overall trading capital.

Every element adds to the loss of a trader.

However, once you remove such impediments, almost everyone has a possibility of becoming a successful Forex trader.

This blog guides you through the basics of starting your Forex trading, let’s get started.

Why Is Forex Trading A Good Investment For Beginners?

Investing in the Forex market has sparked worldwide interest, especially around the UK. Moreover, because of its minimal charges and costs, the Forex market is widely accessible to beginner traders, giving all the more reasons to start Forex trading for beginners in the UK.

Surprisingly, that isn’t all! Following are some of the reasons why Forex trading is a smart investment for beginners.

  • Time Flexibility

The foreign exchange market is open 24 hours a day, nearly seven days a week for those who don’t already know. You don’t have to wait until the market opens to begin trading. This is because it incorporates a wide range of currencies worldwide that trade on the market.

You have complete control over when you enter and quit a deal. You can trade part-time whether you’re a student, a business owner, or an employee.

  • Accessibility Of Trade

Compared to other online trading platforms, the Forex market is more accessible. You may start trading FX with as little as $100. To begin trading, you don’t need a large sum of money. You may start with a tiny amount and gradually increase it if you are persistent, wise, and patient. Many people began with minimal investment and have grown to trade in the seven figures.

Another fascinating aspect of Forex trading is that you may quickly open a trading account. With the presence of numerous Forex brokers, you can begin by simply completing the registration process, submitting your papers, and funding your trading account.

  • Seamless Liquidity

Given its market size of approximately $2 trillion, Forex trading is highly liquid. As a result, you may simply enter or leave a position as an investor without worrying about the price soaring too far before you execute your transaction.

Under normal market conditions, you can always buy or sell with a single click because someone on the opposite side of the market is always eager to accept your offer. Thanks to several online platforms, you may also set your online trading platform to automatically quit your trading position after locking in the desired profit via the ‘stop-loss’ method.

  • Higher Profitability

This is likely an essential factor for every investor to consider. The Forex market is extremely rewarding, with the ability to ten-fold your initial investment in a single day. In addition, you operate with pairs in the Forex market, making it a two-way market.

As one currency falls in value, the other rises in value. In contrast to equity and derivatives trading, your profitability rises with the increase in your shares. Here, you can easily make a lot of money, even if the Forex currency downtrends in value.

The process is as simple as buying a currency if you believe it will rise in value. When you sense a currency’s value is declining, you sell it.

Interesting right? If you take the time to learn how to start Forex trading UK, you will reap huge profits. And now that you know the perks, let’s delve into the factors which beginners need to know to start forex trading.

Steps Beginners Need To Know To Start Trading Forex In The UK

  • Pick your currency pair

As a forex trader, the first choice you’ll have to make is choosing currency pairs you want to trade. You need to select from many major, minor, and exotic currency pairings. However, if you’re a new beginner, it is better to start by looking for currencies you’re familiar with before moving on to currencies you have less experience with.

  • Determine the type of forex trade to perform

There are numerous methods involved in the process when it comes to forex trading. First, you need to determine the type of forex trade you’d want to execute your training with.

  • Decide whether to buy or sell

Once you’ve determined the type of forex trade you want to execute, the next step is to choose the type of market you want to trade with. Next, you’ll need to figure out the current price of the trade and the direction you are anticipating the market movement.

There are two prices for each currency pair. The bid or sale price is the first, while the ask or purchase price is the second. The spread is the difference between the two reported prices, representing your trading cost.

Since these Forex pairs are priced in terms of different currencies (base vs. quote currency):

– You purchase the pair if your strategy says that the base currency will move up against the quoted currency or the quote moves down against the base currency.

– You choose to sell your currency pair if your strategy says that the base currency will move down compared to the quotation. Or if you believe the quote will appreciate against the base currency.

  • Add your orders

An order is an instruction that allows you to trade at a future date and time when exchange rates will be at a certain level. In this case, profits are locked in via stop-loss and limit orders, and losses are kept to a minimum.

  • Monitor your trading position

Your profit and loss (P&L) change with movement in the market price when you have an open position. That’s why it’s critical to keep an eye on your P&L in real-time. This allows you to create or close trading positions as needed quickly.

  • Close your trading position

The last step in your Forex trading process is closing the trade. This process is identical to that of initiating a position. For example, if you bought 5 units at the start, you must sell the same amount. When you complete a deal, your earnings and losses are immediately reflected in your trading account.

Is Forex Trading Legal In The UK?

Is Forex trading legal in the UK? While it appears to be a minor concern for beginner traders, it’s imperative to understand this factor. Yes, it is entirely legal for trade.

The United Kingdom, like other nations, permits Forex traders and brokers to trade and secure profits. Being the largest country in terms of trading capital, it is by far the best for strict and trustworthy policies.

How To Spot And Avoid Forex Trading Scams?

Being the largest Forex trading market has its drawbacks! The market always catches the attention of unwanted scammers and frauds. Scams in the Forex market have continued to exist as long as the market itself. Scammers are always lurking close with new and better schemes being introduced in the market.

Scams involving investments come in a variety of shapes and sizes. However, the most common part about this process is that Forex con artists like to trap beginner traders.

Is there a solution to this problem?

Yes, one of the best ways to safeguard your funds from such scammers is to learn how to start Forex trading in the UK, before entering the markets. Besides, here are a few ways by which you might spot and avoid such scams.

Forex scams often look like a “too-good-to-be-true opportunity.” The most obvious sign of a Forex scammer is their promise of providing you with extraordinary returns with minimal or zero risk. Well, that’s your first red flag!

Here are some other major scams you should beware of:

  1. Robot Scams: A Forex robot is a trading software that opens and closes transactions using lines of computer codes, algorithms as technical indications. However, not every Forex robot is a rip-off; some are genuine.
  2. Individual signal sellers: Individuals offering Forex signals often help you with trade ideas that include the name of the currency pair, direction, entry price, target levels, and stop loss. This is where you need to get attentive and avoid any promise made by any influencer you come across.

Remember, when it comes to such fishy instances, try to recall what you’ve learned. There is no such thing as a 100% guarantee. So always be aware of your decision while coming across any such incident.

Takeaway Tips For Beginner Forex Traders

Forex trading may be fun and successful if tackled carefully and preparedly. But, unfortunately, that’s not the case! Many new traders don’t take the time to grasp the fundamentals and instead dive right in without completely understanding the trading aspects.

Therefore, here are a few forex trading tips to help you prepare better:

  • Be careful before using too much leverage

The ability to trade on margin, or leveraged trading, is one facet of the forex market that draws many traders. However, trading with a bit of initial deposit might allow you to create huge positions. Therefore, it is always smart to beware of the leverage while deciding on trade size.

Forex is generally traded using high leverage value. You may invest a tiny proportion of the whole amount while still making a profit or losing money as if you had invested the entire nominal value. This may work both for and against you. There’s a chance you’ll lose part or all of your money in the process, which might be you losing more money than you put into a trade.

  • Cut-off emotion from your trading

When trading, staying calm and in a balanced frame of mind is essential for staying focused on pertinent events. Always keep in mind that the market’s behaviors are impersonal.

We understand that saying it is simple but putting it into practice is challenging, especially in the momentary heat when you must make a split-second choice. Try not to give in to your emotions and remember what you’ve learned.

  • Place your orders with a stop-loss format:

Some traders hold on to lost positions for far too long, believing that the market would correct itself. But unfortunately, they also tend to exit winning positions far too fast to lock in a rapid profit, which removes the opportunity for more significant profits.

Although this mindset may seem appealing, you must have the patience to enter such deals that give you an opportunity. First, however, you need to be disciplined and place stop-loss to your calls, highlighting a point in which the deal automatically shuts when the market moves. 

  • Develop a sound strategy

Before placing your first trade, you should spend substantial time deciding on your approach. Once done, it will be easier for you to concentrate on market occurrences.

Some new forex traders enter the market without a thorough understanding of their selected currency pair, how they intend to profit from price swings, or how world events impact currencies. Before risking your cash, you must study market price activity and try to detect trading patterns, with your observations assisting you in developing a trading plan and trading style.

  • Don’t think of Forex as a get rich quick scheme

Novice traders often mistake viewing Forex as a straightforward method to become wealthy quickly. Instead, you should think about the hazards and work required to reach such a goal.

Attempting to earn a high profit by placing large transactions is unlikely to be effective in the long run since trade will ultimately go against you, resulting in severe losses.

Now that you are handy with the tips you need to keep in mind for your trade, let’s have an insight into the different trading strategies for Forex beginners.

Trading Strategies Beginner Forex Investors In The UK Should Know

When it comes to the different Forex trading strategies, they’re usually differentiated via market-specific variables, distributed among the different timeframes. The market changes in minutes or over several days in one strategy.

As a newbie, you may start your trading using a forex demo account to try several methods and determine their relative success rate and fit your strategy. Adding to it, you can also experiment with different technical indications for marking your entry and exit locations and combine elements from several techniques.

Here are some of the most commonly used Forex strategies you should know of:

  • Forex scalping: Under this strategy, traders engage in a number of short-term trades, earning tiny but frequent trade gains. This method is best suited for real-time traders, who are more devoted in front of the computer screens and have a significant amount of time to trade with technical analysis.
  • Forex day trading: As the name suggests, this strategy is designed for traders who wish to reduce overnight holding costs and enter and exit at least one transaction each day by anticipating daily market movements. This trading strategy may be good for traders who don’t like the high-speed trading methods of scalping but prefer shorter-term trading.
  • Swing trading: Perhaps one of the best strategies you can use, swing trading is for traders who prefer a balance between fundamental and technical analysis. Swing trade refers to holding a trade for several days to gain profits..
  • Position trading: It entails taking long-term bets while disregarding short-term market changes. Traders who spend more time learning market fundamentals and less time on executing trades or technical analysis may benefit from position trading.

Best Forex Brokers UK

Etoro

eToro is probably one of the most famous and reliable platforms for forex beginners. Founded in 2007, this platform is regulated and authorised globally via its different subsidiaries. This includes regulation from the CySEC (Cyprus Securities and Exchange Commission), FCA (UK Financial Conduct Authority), and ASIC (Australian Securities and Investments Commission).

Etoro

What makes the platform unique is its ability to understand and analyse the traders strategies, allowing you to move to an advanced level with your current idea. Adding to it, the clean UI takes away the fear factor of new traders. The platform is intuitive, easy to operate and offers reliable information and news resources for traders.

Here’s what sets apart eToro from the rest:

Pros

  • Highly regulated broker
  • Innovative trading platform
  • Wide range of trading assets
  • Investor traders can earn 2% management fee

Cons

  • Higher than average spreads
  • Has no MetaTrader platform

Plus500

Founded in 2008, Plus500 is the most famous Forex trading platform in our list as it is the official sponsor of the Atlético Madrid football club. Based out of the UK, the platform is authorised and regulated by  the FCA (UK Financial Conduct Authority), CySEC (Cyprus Securities and Exchange Commission), and the ASIC (Australian Securities and Investments Commission).

Plus500

This platform’s commission-free model makes this platform unique, which allows traders to make the most of their profit. In addition, this easy-to-operate platform brings 2,500+ CFDs and asset classes, making it versatile for traders of every type.

Here’s why Pulse500 is different:

Pros

  • Multiple accreditations
  • Simple to use proprietary trading platforms.
  • Multilingual customer support 24/7.
  • Commission-free trading.

Cons

  • Lacks trader education
  • No phone support

IG Markets

IG is another, and by far, one of the most reliable trading platforms for beginner Forex traders. One of the oldest forex trading platforms, IG initiated operations in 1974. What makes it unique is that the platform is regulated in six tier-1 jurisdictions, indicating that it is a safe broker (low-risk) for CFDs and forex trading.

ig markets

The platform has become extremely versatile over the years! It currently holds over 17,000 tradable assets, including equities, indices, currencies, commodities, and cryptocurrency. Adding to it, what makes it unique is the presence of a free demo account over the platform.

Here’s what allows IG Markets to stand out:

Pros

  • Neat UI
  • No up-front commissions
  • Regulated by the NFA
  • Available to U.S. traders

Cons

  • Limited product portfolio
  • Slow customer support

Risk Management While Trading Forex In The UK

Risk management is the aspect that makes trading different from gambling! One of the most crucial aspects of a trading strategy is taking measured risks to minimise losses while increasing returns.

When it comes to trading, risk management is simply a collection of guidelines aimed to minimise your losses and maintain an acceptable risk/reward ratio. Here are a few of them.

  • Beware of your personal risk appetite:

Once you’ve started forex trading, you should include risk management into your trading plan. This way, you can have an idea of your risk appetite as it allows you to determine how much you’re willing to risk per transaction and devise entry and exit strategies.

  • Never lose control of your trades:

Knowing when to stop is one of the most crucial aspects of your trading risk management. Trading without a stop-loss may be dangerous, especially for beginners. You could be tempted to break the rules and leave unprofitable positions in the hopes of more profit which may or might not happen. If you have well-defined parameters and a stop-loss order in place, you may better manage your risk.

  • Have realistic trade goals:

It’s critical to have reasonable expectations for what you can accomplish. Without taking extreme risks, a monthly return of 50% is impossible to attain, and the chance of blowing out your account is high. Having more realistic goals, such as obtaining a monthly return of 3%, will assist you in keeping your emotions in check.

How To Learn Forex Trading For Free In The UK

When it comes to learning Forex trading, it  is necessary to learn to trade Forex UK in order to trade properly.

For starters, learn about how the entire trading setup works, how to take trades, what are the active forex trading times, and how to manage risk.

Remember, you may learn more about forex trading by visiting courses from Coinlib academy, reading books, or using other free resources present over the internet.

Forex Trading UK – Take Advantage Now

So that was preferably everything that we think you need to know about Forex trading in the UK! Now that you have understood every aspect of the trading industry, we hope you’re able to make the most of your career as a forex trader.

However, here’s this one last step that continues to keep you from being the expert trader that you’ll soon be. Yes, we’re talking of the platforms which you might get confused with.

Afterall, it’s only human to get confused with all the choices at hand. Therefore, to help you analyse and understand better, we have listed some of the best Forex brokers in the UK in the next section.

 

FAQ

 What Is Forex?

Forex trading is an investing methodology where one currency is exchanged for another. The fundamental goal of this trading method is to correctly estimate whether the value of one currency will rise or fall concerning another.

 How Does Forex Trading Work?

Forex trading usually includes buying and selling one currency for another, so it is quoted in pairs. The forex pair's price resembles a unit of the base currency in the quoted currency.

Forex trading UK times?

The Forex market is one such place that is open 24 hours a day, 7 days a week, throughout the year. So you don’t preferably need time to get started with your journey.

 Are UK-based brokers regulated?

Yes, all the UK-based brokers are regulated under different subsidiary bodies worldwide. So much so, the country is referred to as one of the most trader-friendly places worldwide!

 How much money do I need to open a forex account?

You needn’t necessarily invest a fortune to get started with the Forex markets. You can get started with as low as $100 to get started with the market.

 Can I teach myself to trade forex?

With the various online and offline resources across the internet and book stores, anybody can easily teach themselves to trade Forex. However, given the complexities around its trading, it is always a smart move to first learn to trade Forex in the UK.

 How much do forex traders make in the UK?

The Forex market is worth trillions of dollars! Anybody can make fortunes by trading Forex. However, profitability depends on several factors, including trading strategy, experience, market forces, and other political events. Therefore, you must always be prepared with a risk appetite.

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