Comments

Pages

How to Invest in Foreign Currency Exchange Contracts (Currency Trading)

Posted by at 7:55 AM Read our previous post

1. Decide which type of Foreign Exchange contract or Forex you want to buy. The choices are a Spot currency trading contract or a Forward currency contract. Also, decide which currency you are going to trade.
2.
Understand the rules about each type of currency trading contract. In a Spot contract the buyer and the seller agree to buy/sell the currency at a specific price on the spot. In a Forward contract, the buyer and the seller agree to buy/sell at a specific price on a date in the future. The money is exchanged sometime in the future.
3. If you already have a broker account, find out if it provides currency trading services. You will need to sign a contract to be able to invest or trade in foreign currencies. Once your contract is on file you can buy/sell currency contracts from your account.
4.
Open a Foreign Exchange trading account at a retail foreign exchange broker. If your broker doesn't offer this service you will need to open a new account at a broker that does. Choose a broker that offers training and education on foreign exchange markets. Also, make sure that the broker has licensed customer service representatives.
5. Fund your account after it has been set up. Some brokers require a minimum account balance to start currency trading.
6.
Develop a strategy and start trading foreign exchange contracts in your account. In this stage you should decide: what currencies to trade, how much money you will invest in each contract, the expiration date of each contract (30 days, 60 days, 90 days etc.) and trade a spot or forward contract.
7. Remember that currency trading can be risky, currency prices can fluctuate often and in large amounts. The amount you invest in Forex contracts should be in proportion to how much money you can afford to lose.

About