How to Invest In Foreign Currencies as a Beginner

July 3, 2021

Investing in foreign currencies can be hard, especially for beginners. I have received tons of questions regarding how to invest in foreign currencies as a beginner (also known as forex trading). To those already in the game, you’ll bear witness that investing in foreign currencies creates an exhilarating opportunity to postulate on the price of currencies across the globe, based on the changes in the interest rates. However, if you’re a newbie, this article will help you get started by answering some of your questions regarding how to invest in foreign currencies.

In a previous article, ‘What is Forex Trading and How Does it Work?’, I gave lots of insights about forex trading to help build a foundation as a beginner. In this article, I’ll be much detailed to solidify your knowledge.

Learn How to Start Investing in a Foreign Currency

Jack Schwager, the author of Market Wizards, mentions that,

“The hard work in trading comes in preparation. The actual process of trading, however, should be effortless.”

Source: Investopedia

As a beginner, the best starting point is to learn the skill of forex trading. It’s the preparation stage where you need to work hard. You can decide to learn by yourself, using readily available resources like YouTube and forex trading websites. The only problem of self-learning is that you might not know precisely what you are looking for, resulting to confusion. I recommend taking personalized training to help you move faster and make it easier to understand since you have a person to direct you and answer your questions real time. Taking the personalized forex trading courses doesn’t mean the end of learning. There is more to learn before investing in forex trading, such as risk management, leveraging, and margin trading, among others. Always remember that trading education never ends and that even profitable traders keep advancing their knowledge daily.

Choose Your Broker

Choosing the best broker is fundamental. Remember that as a retail trader, you can only access the foreign currency market through a broker. Before you commit to a broker, it’s advisable to do your research to establish if the broker is the best for you. To guide you in your research, consider the below factors when choosing a foreign currency broker;

The broker must be regulated and licensed by government authorities.
Guaranteed data security.
Good trade execution.
Wide product coverage.
Minimal trading costs, such as low commissions and spreads.
Trading platform that is easy to navigate.
Excellent customer service.
The broker should support your trading style.
A variety of trading tools and educational materials.

Demo Trading

After learning, your next step is opening a demo account and practicing your learned skills. The demo account enables you to experience live market trading with virtual currency. As a beginner, this is the best way to gain real trading experience putting your hard-earned capital at risk. Therefore, I suggest you open a demo account with the same broker you intend to use for live trading to get acquainted with their platform, thus making your live trading easy.

Live Trading

After practicing enough in the demo, now it’s time to open a real or live trading account with your chosen broker. Unlike demo trading, live trading entails trading using real money. With some brokers, you can deposit as low as $5 to start trading, but that’s too minimal to bear the risks involved in forex trading. As a beginner, I suggest you risk less and advance as you become an insider. Remember, investing in foreign currencies is risky; therefore, it’s advisable to risk what you’re willing to lose.

Risk Management

I can’t overemphasize the fact that, like many other ventures, investing in foreign currencies is risky. Therefore, it’s paramount to consider how to implement risk management strategies in your trading. Doing so will give you a hedge to effectively manage risks and lower your exposure to such risks.

Conclusion

Investing in foreign currencies/forex trading is thrilling, but it’s a field that needs some level of expertise. At Investors Hacks, we help you kick start your foreign currencies investment journey by offering an in-depth, personalized forex trading course systematically. We go beyond the training to offering guidance and the support your need to become an insider. Remember the African proverb,

‘If you want to walk fast, walk alone. But if you want to walk far, walk together.’

Subcribe to my YouTube Channel today and access my FREE forex trading course, and let’s walk together in your foreign currencies investment journey.

Image Credit: Investment U