You can easily trade in currencies online via a forex broker. But first, let’s discuss why you should trade Forex and why you should trade through a Forex Broker.

Why trade Forex?

Forex is actually a word made up of two other words; namely ‘foreign’ and ‘exchange’. In Dutch, it is also referred to as currency trading.

Currency trading is popular worldwide for several reasons. You can earn money on the forex market. There are many investors who consciously buy a particular currency to invest in.

A currency can become worth more or less just like a share. By buying and selling at the right time, you can therefore make money with currency trading. This is attractive because the current savings interest rate is so low that saving money does not yield much.

As a private individual, you can also easily enter this world. There are several forex brokers that offer a platform on which you as a private person can trade in currencies.

What is a forex broker?

In the past, a forex broker was a person who facilitated the buying and selling of instruments on the exchange. This is still the case today, but now there are companies with handy digital systems that facilitate trade.

If you want to trade forex, it is essential that you do so through a forex broker. Only in this way will you gain access to the market, and you can buy and sell your investments.

A forex broker, therefore, offers you a platform where you can invest in different markets and instruments. You can, for example, trade CFDs of different currency pairs via a forex broker.

With these forex brokers, you can easily create an account in almost all cases. Then you often have to verify your identity and link your bank account. After that, you can easily deposit money into your account and you can start investing.

Check out the best forex broker lowest spread.

How can I earn money through a forex broker?

Forex trading nowadays takes place almost entirely online. In order to participate in the forex trade, it is essential to work through a forex broker. There are many forex brokers who offer a special platform for this.

Via the trading platform of the forex broker, you speculate about the value of one currency against another currency. You buy a certain amount of one currency with another currency. You respond to small changes in exchange rates.

Do you expect the value of one currency to increase compared to another? Then you buy them up in large numbers. You then sell it when the price has risen. By doing this with large numbers, a small profit can quickly increase significantly. The higher the risk, the higher the profit.

Want to know how to start with stock trading? Read How to Build Fortune with Stock Trading

How do I start with a forex broker?

When trading currencies you always start with choosing a forex broker. You can buy and sell the currency via the platform of the forex broker. Because the speed of the purchase and sale in forex trading is of great importance, it is important to choose good forex brokers who focus on facilitating fast trades.

  • When you have chosen the forex broker, create an account on the platform and make sure to complete all steps. This means that you upload your ID, link your bank account, and go through the mandatory questionnaire.
  • You can then search at the forex broker for the currency pair you want to trade with. It is wise to start with currencies that you know a lot about. By following the world news, you stay informed of economic and political developments that influence the course.
  • You can see the price development on the platform of your forex broker. You can analyze this over a longer period (as you can see in the image top left), or set it to only see the most recent developments (see image top right).
  • After analyzing the price, you can start speculating about the price changes. When you think a currency will gain in value, you can speculate on a price increase and choose to go long.
  • If you expect the price to fall, you can speculate on a price drop. You then choose to go short.
  • You can also choose to use leverage. This increases the value of your trade, without increasing your own stake.
  • This way you can earn a lot of money quickly, but you can also lose it. The use of levers, therefore, entails great risk.

There are many different forex brokers where you can start trading currencies. First, try out a demo account with the different forex brokers so that you know what the best forex broker is for you.