The Beginning of Forex Trading: From Currency Pair Selection to Risk Management

Foreign exchange trading is an investment activity that generates profits by utilizing currency exchange rate fluctuations. The global forex market is highly liquid and operates 24 hours a day, excluding weekends, allowing investors to trade freely according to their schedules. Especially for Korean investors, the ability to access various currency pairs such as the Australian exchange rate, EUR/USD, USD/JPY, and others is a major attraction of forex trading.

How to Open an Account to Start Forex Trading

To begin forex trading, you first need to open a trading account. Korean investors have two options.

Using Domestic Financial Institutions: Domestic securities firms such as KB Securities, Kiwoom Securities, Samsung Futures, etc., offer forex margin trading services. To open an account, you need an ID, a personal mobile phone, and a personal bank account. Most providers support mobile non-face-to-face verification.

Utilizing Global Brokers: Overseas specialized brokerage firms also allow you to open forex accounts. These brokers enable non-face-to-face account opening with just an ID, often offer lower initial deposit requirements than domestic firms, and provide Korean-language customer support. They support a wide range of currency pairs, including minor currencies like the Australian dollar, and offer high flexibility in leverage usage.

Things to Check When Choosing a Global Broker

When selecting an overseas trading platform, be sure to review the following factors.

Regulatory Stability: Verify whether the broker is licensed by international regulatory agencies such as the UK Financial Conduct Authority(FCA), Australian Securities and Investments Commission(ASIC), etc. No matter how favorable the trading conditions are, untrustworthy brokers pose risks. Protecting investor assets through measures like segregated accounts is also important.

Trading Tools and Cost Structure: Check whether standard platforms like MetaTrader 4/5, cTrader are supported, whether order functions like stop-loss and trailing stop are available, mobile app accessibility, and user-friendly interfaces suitable for beginners. Transparency in fee structures is also crucial; it’s better to choose brokers that offer reasonable costs and clear fee disclosures rather than just emphasizing low commissions.

Deposit and Withdrawal Procedures: Ensure that fund deposits and withdrawals are simple and that the account opening process is not complicated. cumbersome procedures can hinder long-term trading.

Customer Support: Confirm whether 24-hour inquiry support and Korean-language customer service are available. Prompt support is essential when issues arise during trading.

Main Types of Forex Accounts

Here is a summary of the features of each account type for beginners.

Demo Account: A virtual fund account used to practice trading under real market conditions. It’s suitable for gaining trading experience without the risk of loss. Most brokers allow switching between real and demo accounts with a single click.

Standard Account: The broker’s basic trading account, allowing trading in units of 1 lot. Usually, spreads include broker margins, and many execute trades instantly through a dealing desk.

Mini Account: An account aimed at small investors. It allows trading in smaller units like 0.1 lots, suitable for beginners who want to trade with real funds but cannot invest large capital. However, it may have lower priority in order execution.

ECN Account: A mode where orders are matched directly with liquidity providers without going through a broker. It offers relatively low spreads and reduces the risk of price manipulation, but often incurs separate trading fees.

Three Effective Steps for Forex Trading

Step 1: Decide on the currency pair to trade

Start with highly liquid major currency pairs such as EUR/USD, USD/JPY, GBP/USD. These pairs have many buyers and sellers, resulting in low spreads and minimal price distortion. Avoid exotic currency pairs with high volatility, such as the Australian dollar, during the beginner stage.

Step 2: Analyze the exchange rate trend

Analyze the trend of the selected currency pair. Fundamental analysis predicts medium- to long-term trends based on interest rates, macroeconomic indicators, geopolitical factors, etc. Technical analysis uses past exchange rate data and trading volume to forecast future movements, with key tools like support/resistance levels, moving averages, and chart patterns. Use both methods and focus on the approach that suits your investment style.

( Step 3: Execute trades and manage risks

Create a detailed plan including entry and exit points before trading, and strictly follow it. Stop-loss orders are essential, and beginners are advised to trade with low leverage or without leverage. Keep a daily or post-trade trading journal to review mistakes and continuously improve your strategy.

Funds Needed to Open a Forex Account

Most account openings are free, but the minimum deposit required for actual trading varies by broker. Some brokers charge account maintenance fees, so it’s advisable to check their fee policies in advance on their websites.

Forex trading can increase your chances of success through systematic planning and continuous learning. Remember that choosing a reliable broker and practicing prudent risk management are the foundations of successful trading.