If you woke up one day and suddenly found yourself in the UK yearning for a chance to trade in forex, how would you go about it? Did you know that there are a few key differences from the rest of the world when it comes to trading forex in the UK? Well, there is, and we are going to look at how you can go about this.
But before we do, if you live and reside in England, Scotland, Wales, or Northern Ireland, you can already engage in forex trading online, and this is a great stepping stone to kick off your future with trading. Let’s dive right in.
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How Exactly Does It Work In The Uk?
First things first, FX traders are the ones who speculate on price fluctuations in the currency market. The traders then go on to sell a single currency pair while buying another at the same time. Remember that currency prices are almost always quoted in pairs.
For traders to trade in the UK, they need to create and register an account with an online broker. These brokers then connect traders to the market, which in turn allows them to trade, and gives them valuable insight and knowledge in the grander scheme of things. Furthermore, online brokers also extend credit which is known as leverage in the trading world.
Trading Is Fully Regulated In The UK
The laws and regulations governing FX trading in the UK are probably the most robust in the world. And this is great news. Trading is entirely legal, and the laws that govern it do protect everyone involved. The Financial Conduct Authority (FCA) oversees the forex market.
If you intend to become a broker, you must obtain a license from the FCA. An important fact to note is that using a regulated broker reduces your risk of falling victim to a forex trading scam. So always be aware and know that using a regulated broker is imperative to protect yourself.
How To Get Started
Getting started is a straightforward process; there are no hidden fees, no hidden agenda, and it can be done from the comfort of your home. First up, you need to register an account with an FCA licensed broker – remember we said earlier that to protect yourself against scammers, you need to find an FCA accredited broker.
But before you select your broker, do your research. Accredited and regulated brokers also have a reputation to keep, so read up about this and see what other traders have to say. Word of mouth counts a lot in this market.
Some key things to look out for when selecting your broker is to check on things such as no deposit bonuses, the support they offer, how long they have been in the field (experience is vital in trading), as well as if they include any attractive spreads.
Next, you want to look at currency pairs and select the pair that best works for you. This can often be one of the more overwhelming decisions to make. Most brokers come with a range of currency pairs for you to choose from, but again, do your homework and gather as much information as possible before making your decision.
Your broker will also help guide you depending on where you’d like your trading journey to take you. If you are only just starting, the major currencies will naturally look most attractive. Major currencies such as the dollar or the British pound are almost always traded in large volumes.
What makes this great, especially for a novice trader, is that large currencies come with enough liquidity, meaning that you can trade almost any time. But that’s not all. Major currencies generally have low associated trading costs and the lowest spreads, so there are a few things you can be at ease about.
You can also check currencies and the markets daily to help you decide on which currency pairs to trade.
Major currency pairs include:
- EUR/USD
- USD/JPY
- GBP/USD
- USD/CHF
- USD/CAD
- AUD/USD
- NZD/USD
As you can see, all the major pairs include the dollar and not surprisingly. The dollar is one of the strongest currencies in the world. However, you do find currency pairs that do not include the dollar. Further to this, you will find exotic currency pairs that include a developing country like South Africa, paired with a major currency like the pound.
Remember that FX trading, no matter the part of the world you find yourself in, is fantastic, so keep a level head, do your research, and more importantly, trade with your head, not your heart.
