You can use this article as a practical and basic guide for beginners to understanding what is forex market, how to trade forex in the UK, and how to open a forex trading account in 3 steps.
London and the United Kingdom have been a financial centre of Europe for many centuries, so it shouldn’t come as a surprise to anyone that the United Kingdom offers great opportunities when it comes to Forex dealing. London is actually the largest currency trading centre today, with nearly 37% of all trading, and an astonishing $1,5 trillion going through forex securities of London, compared to the 6% of Tokyo, and 18% of New-York. When it comes to forex trading, the United Kingdom offers plenty of experienced dealers with a great reputation, making the country one of the most well-equipped places in the whole world for foreign currency trading.
FX trading is fully legal in the United Kingdom. Foreign currency trading in the UK is regulated by FCA, the Financial Conduct Authority. They were given their statutory powers by the Financial Services and Markets Act, that was passed by the United Kingdom Parliament in 2000. This organization is an independent body, that not only regulates but supervises the whole financial services industry in the United Kingdom. No country is free of scandals and fraud, but when it comes to security, the United Kingdom probably offers the best solutions for safe foreign currency trading to anyone. FCA requires the client, for example, to separate their assets from the assets of the company, making the clients’ account almost 100% immune to some claims that creditors could make in the unfortunate event of fraud, or bankruptcy.
The Foreign exchange market – or as they often call it, the Forex market – is where currencies are being traded. Not only it is the largest financial market, where hundreds of billions of dollars are getting exchanged every single day, but it is also actually a market that is still growing, and because of its fluidity and sheer size, it is considered to be the most efficient financial market in the world.
The most important thing about forex trading is to understand the simple notion that lies behind the numbers. Every single exchange will involve buying a currency and selling another at the same time. The value of one currency is a non-existent phenomenon since its value will always be determined by comparing it to another currency. The currency quoted first, will be the ’base currency’, and the currency they will use as a second reference, will be the ’counter currency’. Together, they are a ’currency pair’. Traders learn to think about currency pairs as a single unit they can either buy or sell. The most often traded currency pairs are EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
When someone decides they want to get in on the action, the first and most important thing is to understand the basic terminology. We’ve already discussed what is the base, and the counter currency is, but there are some other important elements.
The next important step is to learn how to read the forex quote. The bid price will always be on the left, quoted first, and the ask price will always be on the right, as the second reference.
We have chosen the best UK forex brokers on the internet after researching more than 50 online forex brokers in the UK and comparing their features.
This is the trickiest part. Unless somebody wants to rely on pure luck, this is where anybody who wants to make some money, will need to have insight. They don’t necessarily need a degree, but they will need to have some dedication and resourcefulness, so they’ll be able to make some predictions, and educated guesses about the possible change in the economy. Knowing a thing or two about politics also won’t hurt.
Forex trading has grown in popularity since the start of the 21st century. Thanks to the internet technology that brought the Forex trading in the palm of our hand. Today, anyone with a computer or a mobile device can easily open a Forex trading account and start trading. The technology revolution has brought a huge influx of new traders to the Forex market and it has become one of the biggest financial markets in the world. Its daily turnover has now peaked to $5.2 trillion compared to only $500 billion back in the 1980s.
The UK is one of the biggest hubs of the Foreign Exchange market and home to some of the largest Forex brokerage firms. It has an equally higher number of forex traders that are estimated to 730,000. The number of Forex traders in the UK are twice as many as in any other European country. The fact that a great number of people are attracted to Forex trading every day there is still the need to know the exact process of opening a Forex trading account. In the UK, the process is fairly simple and involves 3 steps.
In the first step, you have to choose a Forex broker and visit their website. You need to fill out your personal information including your name, address, and contact details. Different brokers have different verification requirements. Some Forex brokers in the UK may ask you for a bank statement or a utility bill stating your address. Choosing a broker is the first and most important step in your Forex trading carrier. You should make sure that the broker is regulated by the FCA (Financial Conduct Authority) and following the guidelines set by the regulator.
In the second step, you will have to select an account type. These days Fx brokers offer various types of accounts with different trading conditions. The main types are mini, micro, standard, and managed accounts. If you are starting with a small amount perhaps a mini account will be suitable for you as it will provide an adequate leverage facility. However, you should always check additional things associated with a specific account type such as commissions, spread, negative balance protection and so forth.
In the third and final step, you will have to fund your account. After funding your account, you should be ready for trading provided there are no other requirements from the broker’s
compliance department. Before funding your account, you must once again make sure that your broker is following the regulator’s requirements and keeping your funds in a segregated trading account.