Page 162 - Ultimate Guide to Currency Trading

You can even use leverage to buy these products, but your leverage would be limited just as it

would be when buying as stock.
This is actually a good alternative for many investors who are just get-ting into watching Forex

pairs and getting to know the FX market. In order to invest properly you will still need to read your
broker's reports, go to central banking websites, etc. You might find that FX investing with currency

ETFs is perfect for you. If you like it, then work it into your overall investment plan and reap the
rewards that FX investing can bring.

Get Up to Speed with a Demo Account

Whether you are new to currency trading or you are an old hand ready to try out new ideas, you
should get familiar with your FX broker's demo accounts. Demonstration accounts are usually offered

by currency brokerage firms as a way for people to try their hand at currency trading without getting
into using real money or even opening an account.

You can do your research to help you determine which Forex broker to use and then sign up
to use their free demo accounts. Most of them are set up to allow you to download their free trading

platforms. This is usually very easy and done by following the prompts on the website.
Once this is done, you will have to choose your starting balance, usually $100,000 to $1 million.

It is best that you start with a number that is closest to what you expect your actual opening balance

to be in order for you to get used to placing orders, trading, and earning profits in this size account. As
you can imagine, it would do little good to get used to trading a $1 million account when you are
planning to put $2,500 in the account once you are ready to trade with real money. If you don't set

your opening balance close to your actual expected balance, then your experiences will be tainted.

You will be getting used to buying larger amounts, and getting used to earning bigger money when in
actuality, this amount of money might be difficult to gain without taking undue risks and overtrading
your account.

The second thing you will have to do is to set your margin. This is a key factor. Once you set

your margin and begin trading, you will quickly get used to the speed at which things happen in your
FX account. Gains and losses happen much quicker with a margin set at 50:1 then at 20:1 or even 10:1.

You will be asking for a disaster if you have been trading at 10:1 in your practice demo account for the
past three months and all of a sudden you switch your margin ratio to 50:1. You will be so used to

trading at the lower margin ration that you will most likely blow up your account in no time, and you
will not even know what has happened. You will have the most difficult time setting up trades and