Learn How To Trade Forex Successfully

By: Boris_Dzhingarov

f you are looking to get into forex trading, you might want a guide to help you make the very first step towards it. You can consider this article as the first step. Before starting forex trading, you need to gather the most basic knowledge about the forex market.

What is Forex Trading

Foreign Exchange trading, mostly known as Forex Trading, is the exchange of currencies across the world. It can be simply used for normal purposes like traveling, buying products from another country, etc. However, Forex Trading is vastly used by forex traders to make a profit through the exchange rates. Forex Trading operates on the OTC market system (Over the counter) and is run by a network of banks situated in four major forex trading centers with different time zones which are: Sydney, New York, London, and Tokyo.

Know the Basics

If you want to get into forex trading, you need to clear your basic concepts of forex trading. Some of the basic questions which every beginner need answer to are:

How does Forex Market work?
When traders exchange one particular currency for another, then the most exchanged currency values up. In other words, when the demand for one currency is high, its value goes up. Although there are many other factors like country growth, geopolitical factors, import-export, etc., on which the value of the currency depends upon, trading helps to fluctuate the values a bit, helping traders to make a profit out of it.

What is “Pair & PIP”?
You need to exchange one currency for another one. Unlike the stock market, you cannot hold one currency without exchanging it for another. And that is why forex trading is done in “pairs.” PIP is “percent in points.” Pip is a concept of tracking the smallest movement in the currencies. It helps the traders to bear the losses.

Who decides the market price?
As mentioned earlier, the exchange rate depends on a lot of factors like geopolitical reasons, import-export, natural reasons, etc. Traders make a lot of profit because of any sudden incident that happens because of the mentioned reason. However, most traders rely on the minute movements in the currencies to make a profit.

How Forex Market is different from Share Market?
Forex market and share market are different in many ways. The forex market depends on the countries overall growth, whereas the share market majorly depends on the growth of a particular institution. Another major difference is that forex trading happens in pairs, whereas it is not necessary to buy a share in exchange for another share.

Resources you will need to start Forex Trading

Currency Trading Account: To start forex trading, you need a currency trading account that lets you exchange multiple currencies. Your account is verified by government bodies that license the trading accounts. 

Forex Trading Platforms
Forex trading platforms are websites that provide all the live information about the market to help you make decisions about the exchange. There are a lot of good forex trading platforms you can choose from. Most of the platforms use candlestick, bar, or line charts to let you analyze the market with details.

Forex Broker

Forex Brokers helps you to get started in forex trading by finding the best exchange for you. Many people find hiring a forex broker helpful to make more profit. In one case, a trader hired the Best forex broker in the UK, which helped the trader to find an exchange deal, almost doubling their investment. Hence, it is advisable to hire a forex broker if you are not an expert in the field. 

Tips for the Forex Trading Beginner

Plan
You might consider it a vague tip, but forex trading needs a plan. You need to plan how much you should invest, what are the losses you can bear, the limit of profit you should expect, and other related factors. They are all important in managing the losses easily.

Study the Market
Before stepping into forex trading, you should deeply study the forex market. If you know the history of every currency, which makes their value go up, the maximum value, and many other factors related to them, you can make a better decision during forex trading.

Don’t be emotional
Trading is always about numbers, losses, and profits. You should not attach any emotional value to any stock or currency. Emotions in trading may lead to very bad decisions.

Choose the right resources
There are a lot of options in the market for all the resources mentioned above in the article. You need to find the best trading platform and best forex broker. You can take help from your experienced friend or research yourself to find them.

Risks involved in Forex Trading

Certain risks involved in forex trading are:

Uncontrollable market situations
The value of the currencies depends on a lot of factors. Almost none can be controlled by an individual. Nor is it legal to try controlling the market. So, there is always a huge risk of facing a loss caused by any of the thousands of factors at any moment.

Cost of Trading
Forex trading comes at a price that depends on many factors. Sometimes, the liquidity of the market slows down, causing the cost of trading to increase. The low liquidity can be caused because of unexpected or unforeseen events like bank holidays, lockdown, etc.

Unreliable resources

Again, if your resources to research or trade are not reliable, you cannot make any profit. You need a good forex trading platform to analyze the market and trade the currencies. If the information provided by the forex platform is not correct, you may end up losing a lot of money. Also, you might get in the company of a lousy forex broker who uses you or manipulate the exchanges for their own profit. Hence, there is a big risk of unreliable resources.

Conclusion

Forex Trading is a risky business. People do it as their side business. They either end up making it their primary source of income or forgetting about it. It all depends on good market research and reliable resources. Along with that, you need skills to analyze all the best options to trade. Moreover, a quick response to the market situations can help you do a lot better in forex trading.

By Boris Dzhingarov

© 2020 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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