Easy forex trading with eToro
If you Google for ‘forex trading’ you may find plenty of online forex trading platforms. I found that eToro was pretty good due to the following reasons:
- You can open an eToro forex trading account with as low as $50 initial deposit
- On top of your first time deposit (FTD) they will add a welcome bonus of 25%. i.e. if you start an account with $1000, they will add $250 and hence you are already starting on profit. The bonus has a cap of $1000 (There are companies who give even 100% bonus but beware of their hidden costs)
- No hidden costs or brokerage charges
- You get a personal account manager (PAM) assigned to you if you start an account with at least $500. This means that you will get regular phone calls on trading ideas based on global economic and forex news
- Leverage up to 400 times and it allows micro-lots (see Forex terminologies below)
- eToro provides an excellent web based trading tool as well as a fast desktop based trading tool
- You can add or withdraw funds via PayPal. This may be one of the major criteria for bloggers who already have their blog income in PayPal. Many other platforms don’t support PayPal transfer
- Excellent customer support – via phone, email as well as live chat
- The practice account to get used to forex trading is very good and uses realtime data
If interested you may sign up with eToro by clicking the banner below.
Frequently asked questions – FAQs on Forex Trading
The following are some of the frequently asked questions on FX trading:
Why many of the Forex trading companies are in Cyprus?
Cyprus (or even British Virgin Islands etc) is the place where many of these online Forex trading firms are setup and there are many reasons for this. Firstly, it’s a European Union (EU) country and hence Euro based economy. The low cost of living is another factor while being very near to Europe (it’s more like a Eurasian country) and it boasts world class infrastructure for businesses to get started there. Another important factor is that the investors can withdraw money without much tax implications.
Is forex trading legal in India?
As far as I know, the Reserve Bank of India does not allow any resident Indian citizen to trade on Forex unless he or she does it through Indian participatory banks. That too they allow mainly USD-INR pairing. Hence I would suggest Indians to stay away from Forex trading. However, if you are a non-resident Indian, there is no issue. The other option is operate with the accounts of any friend or relative abroad. Needless to say, most other countries permit foreign exchange trading by individuals.
Base currency: The primary currency that you are trading or interested in. e.g. in a EURUSD currency pair, Euro (EUR) is the base currency and USD is called the quote currency
Counter currency: Same as the quote currency or second currency in a pair
Buy price (Ask rate): The price at which a buyer can buy a pair
Forex: Foreign Exchange or FX
Leverage: Leverage the loan from your broker that allows you to trade 100 or 200 times of your capital. E.g. it is possible for you to buy 10000 USDEUR with even $100 by applying the right leverage size. This can potentially increase your gains multifold but has the risk of loosing as well.
Lot: Lot is the standard unit of trading. Typically the standard lots are 100,000 units, mini-lots are 10,000 units and micro-lots 1000 units.
Open position: Your current holdings or trades that are not closed yet.
Pip: Pip (or Point) is the smallest price change that can be made on a currency pair quote. For most currencies (except for JPY combinations), the pip is usually a basis point or 0.0001. Hence the price movements are always in units of 0.0001 and smaller values than that. It may be noted that most forex quotes are in four decimal places.
Sell price (Bid rate): The price at which a pair can be sold
Short Position: Going short means that you are opening sell order hoping that the prices of a currency pair will fall. Later you can close that position at lower prices thereby booking profit.
Spread: Difference between the current buy and sell prices.
Stop Loss: The automatic closure price specified just in case your pair moves the other direction than expected. The stop loss order makes sure that you are protected from further losses by automatically closing the open positions at that specified stop loss price.
Forex Tips as shared by experts
- Never invest too much initially, start with smaller amounts
- Use stop loss effectively to limit your losses
- Never use high leverages initially. Stick to x5 to x25 range max. Never leverage 100 or 200 times until you become a pro
- Practice a lot on the practice trading account before putting your real money
- It is better to start trading on Silver or Gold rather than directly jumping into currency trading. The same platform allows you to trade silver/gold.
- Never take emotional decisions. If your pair is loosing, just exit by booking losses. If it’s going up, exit at the pre-decided price rather than waiting for more
Happy Money Making!
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