Forex trading is undoubtedly one of the most popular forms of investment in the world. When we talk about making more money, FX takes leading positions and there are no questions asked about this issue.
In the United Kingdom, Forex has managed to firmly grab a foothold in the past few years. The coronavirus pandemic that started in 2020 and still continues, managed to drastically alter the situation – right now FX trading is a popular activity that a lot of British citizens turn to. In the following article, we will explore the main factors individuals need to consider before opening a trading account in Great Britain.
Factors to Consider
A lot of people have understood that keeping money in deposits is not profitable – it is better to invest in securities. But it is advisable not to rush: there are a few things to be sorted out before opening a brokerage account in the United Kingdom.
Create a reserve fund
You shouldn’t invest all the funds you have as you may need them in an emergency. You may suddenly need money, but you will not be able to withdraw it quickly from the brokerage account.
It is better to create a reserve fund that will last for 3–12 months of life without additional cash receipts. This is especially true for freelancers, whose income is unstable. In general, do not start investing until you have savings. It is profitable to keep the reserve fund on a deposit with the possibility of withdrawing money.
Choose Trading Platform Wisely
Trading platforms are necessary so that you can trade better on a broker’s website. There are numerous trading platforms from MetaTrader 5 to cTrader and all of them come with different features. When we talk about the United Kingdom, brokers established in this country own the majority of prominent trading platforms.
Both MT4 and MT5 are platforms that you need to consider. There are web and mobile platforms too, but they come nowhere close in terms of popularity.
Know that you have to pay for investing
There are many commissions that you have to pay. This could be:
- commission for managing the mutual fund;
- exchange commission for the purchase/sale of securities;
- broker’s commission for maintaining an account;
- depositary commission for safekeeping of securities;
- commission for using trading platforms, etc.
As a rule, investment costs do not exceed a few percent. Do not be afraid of them, but know that they exist and choose the broker and plan that suits you.
You can use robots
There are many trading robots (robo-advisers) with minimal or no fees. They work on the basis of artificial intelligence, which recommends you invest according to algorithms. For the average novice investor, a robot consultant is great.
You need to build on financial goals
Many people make the mistake of choosing investments based on their own preferences. This path can lead to buying popular stocks, the value of which will collapse.
Instead, build on your ultimate financial goals, such as the amount you need to save to buy a home, wedding expenses, or retirement expenses. Calculate which investments will help you achieve these goals with the least risk.
Listen to the head, not the heart
Many investors make decisions based on fear or greed, with overconfidence in the market. None of the emotions help in investing. Instead, you need to develop a goal-based strategy that you will implement with care.
Diversify your portfolio
A portfolio with a large number of similar stocks is subject to high risks in a downturn. If you buy different securities, then this can protect against sharp jumps in the value of assets.
Portfolio is one of the most basic concepts in finance. In general, it is advisable not to be afraid of investments and not to hesitate. The sooner you start investing, the faster you can reach your financial goals.