The best way to get a forex education would be to take a basic course on currency trading and then start to trade forex using virtual money in a demo account while you develop a successful strategy to incorporate into your overall trade plan.
While you may have expected a recommendation for more focus on book learning or other forms of training, getting a true feel for trading any financial market requires hands-on involvement. You can also supplement your forex education with classes, webinars, training videos, articles and a broad range of other forex-related information now available to just about anyone with an Internet connection.
In this article, Benzinga explains how to get the best trading education for traders just starting out will need to operate successfully in this massive financial market.
Why is Getting a Forex Education Important?
Knowledge is power in the capital markets and the more you have, the better you’ll be able to read any market you plan on trading. Reading the forex market well so that you can recognize trend reversal and continuation patterns can make a big difference to a currency trader’s overall profitability, which is the main measure of success as a forex trader.
Getting Started in the Forex Market
In case you’re new to the huge foreign exchange market or forex market, it is a decentralized, worldwide and largely unregulated marketplace where national currencies trade relative to each other in pairs. They do so at rates of exchange or exchange rates that fluctuate throughout the around-the-clock trading sessions that stretches from Sunday at 5 p.m. to Friday at 5 p.m. New York time.
Each currency has its own fundamentals and reacts to different economic events. For example, the currency of a resource-based economy, such as Canada, might react favorably to an increase in the price of oil. In contrast, the currency of a country that is dependent on oil imports, such as Japan, might drop in value in that situation.
A rise in oil prices would therefore likely result in an increase in the exchange rate of the CAD/JPY currency pair consisting of the Canadian dollar (CAD) quoted in terms of the Japanese yen (JPY).
Getting a well-rounded forex education can help you understand the underlying fundamentals of national currencies. You might also wish to learn basic technical analysis concepts so you can start to analyze the historical price charts of different currency pairs and develop a technical-based trading system.
Perhaps the most important reason to invest in a good forex education, however, is to help build your confidence as a trader. Having confidence helps you cope with the inevitable losses you will need to take and can help you attain the right psychological mindset for success as a trader, although thinking strategically also contributes to that goal.
Can You DIY Your Forex Education?
While learning the basic mechanics of forex trading can be easy for a DIY-er, becoming a successful currency trader usually requires some form of more extensive training and possibly personal mentoring by an experienced trader.
You can also read books written by experts to learn forex and help you understand more complex topics. Still, while getting a cheap DIY education on forex trading may seem ideal, doing that will likely be insufficient if your goal is to truly master the more advanced forex trading skills and concepts.
Taking a DIY approach to your forex training will also take up your valuable time, so you’ll want to invest your time as wisely as possible. Make sure to review the topics included in any forex course you’re considering to determine if they will add value to your current level of expertise or just waste your time.
Forex trading beginners can usually start out by taking an online course to help them progress along their learning curve. Such trading courses can also help you figure out if you’re cut from the right cloth for a forex trading career.
5 Ways to Get Forex Training
A variety of forex training methods exist to get you started on your way to becoming a successful currency trader. Benzinga introduces five of the best ways you can get forex training in the sections below.
Forex Training Courses
Online forex training courses can offer beginners a great opportunity to learn more about the forex market, what moves it and the basic mechanics of trading it. To get you started, Benzinga has reviewed some of the top forex courses in the article found at this link. Keep in mind that some forex training courses may offer educational presentations, while others might offer more interactive options like Zoom sessions, webinars or one-on-one mentoring where you can ask questions of the instructors.
Guides and Videos
You can also check out some of the forex-related guides and YouTube videos available online to further your forex training on certain topics. While these are often not produced by professional educators, they might help you get some insight into how professional forex traders think and operate in the market. You will generally want to make sure you’re pulling such guides and videos from reputable expert sources and sincere professional traders rather than from a glib salesperson just looking to promote a product or service.
Several expert forex traders have written inexpensive books on how to start trading forex and become successful trading currencies, which can be a great resource if you learn well from reading. Benzinga has also reviewed a number of forex-related educational books in this article to help you further expand your forex-related book collection.
A forex webinar is a forex-related seminar that allows you to view a live online presentation and participate in a real-time conversation from the comfort of your own home or office. To make the best use of your valuable time, check that any webinar lectures you plan on attending are presented by reputable currency traders or educators fluent in your preferred language.
You can acquire general knowledge about the currency market from reading the Frequently Asked Questions (FAQ) sections on reputable forex-related websites. Many online forex brokers have a decent FAQ section you can browse through for answers to forex-related questions you might not even have thought up yet.
Being an Educated Forex Trader Pays Off
If you’ve become well-educated in forex market concepts, then you’ve probably also gained considerable knowledge of chart patterns and market analysis, including both fundamental and technical analysis.
Fundamental analysis will let you identify the reasons currency valuations shift since economic fundamentals can strongly affect the relative value of national currencies. To further understand the moves in some currencies, such as the so-called commodity currencies including the Canadian, Australian and New Zealand dollars, you will also need to know what drives key strategic commodity markets like those for oil and gold.
Other important fundamental factors that can affect currency valuations include major geopolitical events, such as elections and natural disasters. All of these fundamental factors can directly impact the exchange rate of relevant forex currency pairs.
Learning about technical analysis can help you identify forex market trends and pending reversals as well as improve the timing of your trade entry and exit points. Having these key market analysis skills under your belt will generally pay off in improving your profitability as an FX trader since you can use them to develop an objective trading strategy to include in your trade plan.
Finally, your trading personality type can make a big difference to your forex trading success and is a key determinant of whether you are better suited to trade forex yourself or let others trade for you by using copy trading or an account manager.
Learning how to trade forex can help you get to know yourself and how you react to different circumstances and emotional states that arise during the trading process. Obtaining such self-knowledge is one of the key challenges that most successful traders overcome.
Improve Your Forex Trading Education with These Top Brokers
Once you have learned the basics of forex trading, one of the next best steps you can take is to open up a demo account with a reputable online forex broker with a trading platform that meets your trading goals. Using the right trading platform can help you with progress tracking and risk management.
Once you open your brokerage account, you can start to practice trading currencies in real-time and develop a forex trading strategy. Benzinga has taken some of the guesswork out of selecting an online forex broker by compiling the following comparison table for your review.
- securely through Forex.com's websiteBest For:Forex Trading in and Outside the U.S.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- securely through IG Markets's websiteBest For:Forex Execution
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
- securely through eToro Forex's websiteBest For:Demo Accounts
CFD trading is not available to U.S. users. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Frequently Asked Questions
How many years does it take to learn forex?
The basic mechanics of forex trading should only take a few days to master, but learning how to develop and implement a consistently successful trading strategy can take a lifetime of education, practical application and refinement.
Can you go to college for forex?
A college degree is certainly not required to learn how to trade forex. Those professional forex traders who do go to college might major in fields like business, finance, economics and accounting.
Why is forex so difficult?
While the mechanics of forex trading are easy to learn, developing the expertise required to come up with and apply a consistently successful currency trading strategy is the major challenge facing any novice forex trader.
Get a Forex Pro on Your Side
FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets with low pricing and fast, quality execution on every trade.
You can also tap into:
- EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
- Powerful, purpose-built currency trading platforms
- Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program
Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.