It can be confusing when you are first starting out, but the answer to the question "how to trade in forex" is - like most other things in life - actually just a matter of making sure that you take all the necessary steps to learn your new trade before you invest any money in it.

We all have a tendency to expect to be able to things instantly. Never mind that it took us many hours of practice to learn how to walk or ride a bike or drive a car. Now we're adults, new skills should be able to be learned instantly.

Which of course isn't actually the case in real life...

Forex trading is deceptively simple at first glance: all you need to do is work out the direction the market is moving in and then place your trade to take advantage of that.

And, of course, if it really was that simple we'd all be millionaires!

Forex markets move constantly - just set your trading software to a short timescale or tell Metatrader to show the bid and ask prices for your chosen currency pair and you'll see the price jittering. It's these seemingly small movements - typically fractions of a cent - coupled with the power of gearing that allow us to make money from trading in the forex markets.

The next thing you should do is check the bid and ask spread that your broker uses. This will likely vary by currency and may also vary by time of day - in the early hours of the day and especially after a weekend, when there's not as much liquidity in the market and it is still adjusting to anything that happened over the weekend, it's not unusual for the spread to be higher than at the peak of trading. So don't be surprised if your broker gives you a range of figures for the spread and also don't be surprised if some of the less popular currency pairs have a wider gap between the bid and ask prices than the more popular pairs.

This is normal but you will need to take it into account in your trades as obviously it can eat up more of your bank if your dealer takes a higher margin.

You'll gradually get used to all these nuances but until you do it's best to trade "on paper" with a demo account so that you can begin to get the idea of how your proposed trades would work out. Demo trading is an essential part of your forex trading strategy as it allows you to get used to how your trading software platform works as well as how the markets react during the day. Once you start making a profit on paper then you're safe to start trading real money in your account.