Forex Market for Beginners
Playing on the Foreign exchange markets is a kind of sport. Traders know everything about competition, and about the pursuit of a reward, and the need for constant training. Among Forex players, there are champions and legends, and watching changes in quotations can be just as exciting as the score in a long-awaited match.
However, you need to understand that Forex is not a gamble, where there are lucky and not lucky people. In order to make money on Forex, you need knowledge, patience and a well-thought-out trading strategy. Forex rarely brings large profits in the short term (although it is possible), but with a serious approach, you can get a relatively small but stable earnings of about 10-15% of the turnover per month.
If you have never been engaged in Forex trading, do not be afraid. Each of us once went to school for the first time and could not do anything at all, but all graduated from the high school, and some even went to advance their knowledge after that. Just start learning and practicing!
What is Forex trading? Forex is an international financial market on which currency exchange and Forex currency trading take place. It was founded in 1976, when all countries of the world abandoned the gold standard and switched to the Jamaican system, in which exchange rates are set not by the state, but by the market. Forex has become simply necessary for the normal functioning of the global economy and ensuring the exchange of capital between different countries.
How Forex Trading Works
Forex trading is carried out with currency pairs, in which one currency acts as a commodity and the other as a means of payment for this commodity. The most popular currency pair is euro/dollar, or in other words EUR/USD. This means that the euro is bought and sold for dollars. It is necessary to understand that to start trading Forex, you need to have significant amounts of funds available.
Therefore, in order for an ordinary person to enter the Forex market and begin trading Forex currency, a Forex brokers is needed. Brokers provide the so-called leverage to the trader, i.e. additional funds for making trade deals. For example, for every $ 1 a trader can make a transaction for $50. In this case, the leverage will be 1:50. This method of trading in the Forex market is called margin trading.
For many, speculative Forex market trading has become a profession that brings good income. Moreover, trading on the Forex market protects savings from inflation: with proper tools, knowledge and good Forex trading platform, the profitability of a trader’s work is many times higher than inflation.
In order to increase profit, you can use the so-called leverage, i.e. borrow the capital from a Forex broker, having a fixed minimum amount on the account — margin. This allows the trader to open positions that are much larger in volume, as if there is significant capital on his or her Forex trading account. As a result, the trader bears proportional risks, acquiring an opportunity to get a good income.
What is Forex Trading Strategy?
Although finding the best Forex trading platform and best Forex brokers are important factors that determine the success of your trading, developing an appropriate strategy will play an even bigger role. A trading strategy is a set of terms and conditions under which a trader concludes trading operations and makes a decision to buy or sell currency.
There are several dozens of the most popular strategies, among which are both simple and very complex. At the initial stage, traders can choose a strategy for themselves from those already available, but later it would be desirable to develop your own, based on the experience gained, long-term and short-term goals, willingness to take risks, etc.
Until the beginner has mastered specialized educational material on Forex trading, acquired work experience and strategies of successful traders have been studied, one should not hope for success in Forex trading. Fluctuations in this market are so instantaneous that you can lose all of your initial capital in just 15 minutes. A great help in the game on the Foreign exchange market can be mathematical abilities and a logical mindset, which also should be constantly trained.
Forex Trading Advantages
Before you begin to learn how to start Forex trading, here are just some advantages of this type of trading that might motivate you to deepen your knowledge of this topic:
- Forex — making a profit, regardless of the market trend
The fact that you can make money both on a decrease and on an increase in currencies is an advantage of this market. If the stock market begins to fall and the uptrend goes down, it often brings big losses to stock traders.
On Forex, the decline in the price of one currency does not lead to a fall in the market, but only means a relative rise of value of another currency. This feature makes it possible to make a profit on Forex, regardless of the direction of currency movement. After all, the benefit can be extracted both from increase and decrease in exchange rate.
- Forex is a 24-hour trading opportunity
Forex works around the clock due to the location of the main currency areas in all time zones. Therefore, you can trade on the difference in exchange rates at any time convenient for you time (except weekends, when trading is not conducted).
- Forex market is not tied to a specific place
Forex trading is carried out via the internet on special Forex trading platforms. This makes it possible to trade from any place where there is access to the internet. The best forex trading platforms will also offer a large set of trading tools that make trading simple and more effective.
- Forex is an interesting trading process
Foreign exchange trading in the Forex market is an interesting activity that makes you constantly be aware of all international news, which are usually posted on the Forex trading website, and deepen your knowledge of the market.