One hears very often such terms as Forex, Forex business, earnings by Forex, he made a fortune by Forex, Forex traders, Forex market or FX-market! If you are one who is eager to find out what is this you are welcome!
Let’s go! Forex is the foreign exchange and deals with selling or buying of one currency in exchange for another. It’s the world’s most heavily traded market, because it involves businesses, countries and people. And you were also involved at least once, when you were buying some foreign currency in exchange of your country’s currency, or you were making your online shoppings, converting your card means into the currency of that seller, be it dollars, euro, pounds, yens or any other of world currencies.
But you were in search of information about how Forex can change your life and namely what is this as means of making money. So, the main item of goods for Forex market is currency, as you already understood. One buys a currency with another in order to sell it later and get the profit due to exchange rate rise of the target pair.
Forex currencies are always traded in pairs, for example: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/CHF, USD/JPY, USD/CAD, and others. The most popular pairs are those, where the dollar is. It was historically connected to the fact, that when one needed to change Japan’s yen into U.K. pound, one had to convert first yen into U.S. greenbacks and then convert this amount into UK pounds. But now there are so called currency crosses, or cross pairs, where the dollar doesn’t exist and the converting could proceed directly into desired currency, for example: EUR/JPY, GBP/JPY, EUR/CHF, EUR/GBP and etc.
Currency pairs as a self-contained tool deserves the separate theme and it will follow soon.
Coming back to the basis of the Forex market, so one buys low to sell high. But how can one become a part of Forex trading process?
- First of all, you should choose a broker, which will give you the Forex market access. A broker is a sort of regulated and licensed intermediary between buyers and sellers will provide you with the technical basis, such as programs, trading platforms, consulting service, research data on what stocks, funds or other securities to buy and also to offer the informational support and coaching. The brokers’ market is very extensive, that’s why it is important to choose those, who is on everyone’s lips. The famous brokerage companies are working for a long time and comprise a lot of clients would hardly lie down on the job.
- Secondly, to pour oneself into Forex trading one doesn’t need to have financial education, but one should find out everything about this field of money earning, including assessing of the risks. So, you could go through specialised literature, visit some master-classes or seminars, view educational webinars, whatever method, that is more convenient to you.
- Thirdly, you are getting to the good part of Forex trade - practising the gained knowledge by means of demo trading account. A practising account can be opened also by a brokerage company. This type of account is just as real, with the single difference of virtual money, so you have nothing to earn there, neither to lose, but it will help you to feel this market, to master your trading skills, to see how does it work, to try different strategies, moreover you can gain there your start capital. Some big brokers are regularly organising some kind of demo account contests, where the winner, who earns more money, gets the real cash prizes.
Your next step in the Forex market conquering is the choosing the type of trading:
- Traditional trading presupposes that a trader himself is engaged at trading process and will contract manually. This method of trading will give you not only the mean of earning, but also the possibility to assert oneself. The traditional type of trading gives you a unique experience and the market sentiment, transforming a newcomer into a professional. But this type is also risk-bearing in consideration of the fact that one needs more time to avoid the trading mistakes.
- Automated trading means involving robots, that trade for you. They are themselves analysing the market and making deals. It is very convenient, that an automatic system can work 24 hours, while you are engaged by something else, but as any program, it can result a failure or simply misinterpret the market prospects. Nonetheless a robot is not a human brain.
- Forex Trust management - financial method, which gives to the investor the opportunities of trading participation through the successful traders, who get the stipulated pay. Trust management options provide brokerage companies.
So, you are up to trade, what sum is good for first steps in real trading? It should be a sum, that you are ready to lose. Don’t be greedy and don’t believe in fairy tales that once a trader invested his last savings of $200 and he woke up as an island owner in the morning.
According to statistics data ⅔ of traders began their trading career from $100. Some of traders, approximately 20 percent were risked to invest near $300 and less than 15 percent ventured the sum of $300. A very good sign for a beginner is 10 percent profit per month, and with scalping strategies one can get even 20 percent.
Next time you will find more about the currency pairs, types of Forex accounts and others! Stay tuned.