What Is Forex Investing and Trading? a Guide for Beginners
Since you’re reading this article, you’ve probably heard of how lucrative Forex trading can be. The largest financial market in the world is the Forex market, trading about $5.3 trillion every day. However, in April 2019, Forex trading peaked at a whopping $6.6 trillion, which is a clear indicator of the Forex market potential.
Forex investing and trading has grown in popularity over the years for two main reasons. First, with the right trading skills and proper market understanding, Forex trading can be a goldmine. Secondly, it’s very easy to enter Forex trading and even easier to opt-out.
If you’re itching to get a piece of the pie, then you’re in the right hands. In this piece, we’ll look at everything you need about Forex trading for beginners. So grab your notebook and pen, and let’s dive right into it.
What Is Forex Trading?
Forex simply stands for foreign exchange, and you can also shorten it to FX. Forex denotes the exchange of global currencies from one to another, typically via an online platform. The individuals and entities from around the world who come together to exchange these currencies form what is known as the Forex market.
Forex trading is thus taking part in this exchange of currencies in the Forex market. It’s a highly involving trade that requires a firm understanding of market trends and lots of experience to make a killing in the trade.
Characteristics of the Forex Market
As mentioned above, the Forex market is a global market where people exchange currencies. It’s the largest financial market that trades trillions every day. It’s also unlike most markets because there isn’t any actual physical transfer of goods in this market.
Here are a few tenets of the Forex market.
The Forex market never sleeps and is active twenty-four hours a day for five days of the week. This means you can trade whenever you wish, at whatever hour of the day or night.
This makes it an excellent side-hustle for anyone with a full-time job. You can dedicate the day to your job and the evening and early night to Forex trading. It’s an OTC market, which means you can trade from anywhere, and you don’t actually have to be physically present to trade Forex.
Because the Forex market is an OTC market, you can access it from anywhere with an internet connection. It has evolved faster than many other OTC markets, and with the evolution of technology, traders can know real-time fluctuation of currency values.
The Forex market is highly volatile, and the value of a currency may reduce drastically, even because of one single event. For instance, the Brexit situation had a significant impact on the value of the British Pound. The impeachment motion of Donald Trump also had some effect on the value of the US dollar.
Central banks also affect the currencies of their respective countries. If a central bank overprints its currency, the bank drastically reduces the currency’s value.
The Forex market’s volatility is what makes Forex trading a somewhat risky venture. However, as most people say, the bigger the risk the greater the reward.
How to Begin Forex Trading
A little disclaimer, Forex trading isn’t a get-rich-quick scheme that you can start today and make a bundle tomorrow. Well, you technically can, but you need a ridiculous amount of luck to be able to do so. Otherwise, you need a lot of dedication and commitment to make a decent wage from Forex trading.
Here’s how to jump in the Forex trading bandwagon.
Select a Trading Platform or Forex Broker
The first step is to choose a trading platform that you’ll use to carry out all your trading activities. There are plenty of trading platforms to choose from, the most common being eToro and Oanda.
The trading platform you opt for will play a major role in determining the success of your trading activities. Good trading platforms offer new users demo accounts for them to familiarize themselves with the ins and outs of Forex trading.
Make sure you do your homework on any trading platform you plan to sign up for. They should have the right credentials to ascertain their authenticity. Also, make sure you the customer support is reliable and actually helpful before signing up.
Learn About Trading and the Forex Markets
Once you’ve got the trading platform on lock, you can proceed to learn about the Forex markets and Forex trading. Frankly, learning about Forex trading and the Forex market won’t be easy. That’s because the Forex market is a very expansive subject, and Forex trading is even more expansive.
The first thing you should learn about the Forex market is its structure. The Forex market is a virtual global market. Yes, there are some stock markets like the New York Stock Exchange, but the Forex market has no central location.
The main participants of the Forex market are central banks worldwide, retail traders like you, and institutional traders. Retail traders only account for 10% of the Forex trading worldwide, while institutional institutions carry out the remaining 90%. Central banks very rarely interfere with the Forex market.
Understand the Intricacies of Forex Trading
After you’re done with the basics of Forex trading, the next thing you need to clamp down is the intricacies of the trade. This is where you really need to put your best foot forward. That’s because your understanding of the intricate bits like dynamic fibonacci grids, pips, and the likes is what determines whether you’ll succeed in the venture.
For a proper understanding of FX, it’s a good idea to find a mentor or a mentorship program. Most Forex brokers offer such programs, so you better pick the right one. If you’re confident of your knowledge of FX, then the trading can begin.
Forex Investing Can Go Either Way
As much as Forex investing is a goldmine, you can be on the losing end if you don’t play your cards right. As such, it’s crucial to nail your trading platform and also have a firm understanding of the Forex market as a whole. If you can succeed in both, then you’ll be laughing all the way to the bank.
If you need a reliable trading platform and the right mentorship for your FX trading, then contact us today, and we’ll sort you out.