Forex is the money market on which the whole export-import world today. Not only that, it represents the network of big financial institutions, banks, and corporations.
All of these players make Forex one of the most liquid and most profitable markets for individual traders. Once you enter the trade, your chances to make profits are pretty high if you know how to do it properly. Stories about the Forex millionaires are not just stories.
So if you are intrigued with this Forex market, let us explain to you what it entails, why it is so popular, and how eventually you can be part of it.
What is Forex, and why is it so popular?
Forex market is where the currencies are exchanged—all sorts of currencies for the most prominent to the most exotic ones like South Africa Rand. The latter is really known as exotic pairs. It is a market that was not always allowed for individual traders.
With the advent of the internet, we see millions of people entering the market. And especially during these pandemic times.
The principle is to buy the currency which you believe will be on the rise in the future, buy and sell at the right moment. It’s exciting, interesting, and can be really profitable for all those who are eager to make a second income.
It’s a market easy to navigate, and if you are dedicated enough, you can become a professional trader in several months. The training materials are not the problem. You can find these on the web or at your brokerage service. Also, there are many tutorials where seasonal traders explain the use.
The forex market is the market that enables an exchange of various foreign currencies. Anyone can access it. Thanks to the high-speed internet in every corner of the earth we can find it these days. But it wasn’t always like that.
Forex used to be accessible only to initiated circles, big institutions and banks. Large quantities of money reaching trillions of dollars are present on the market. So it gives you the opportunity to take even a small piece of its cake. The small piece for you might mean a fortune. But how difficult it is to enter the market. We have seen that with the internet, you can connect yourself with the trading platform. But there are also other aspects to consider. Let’s dive deeper into the nature of Forex trading.
Trading plan
Since you have opted for trading currencies as your business activity, you need a proper plan. The trading plan includes everything from the strategy, minimum deposit, the total amount dedicated in a specific period of time, risk and money management, and trading journal. A trading journal is an extremely important tool for all rookie traders. It shows your mistakes and helps you to improve your trading decisions.
Trading strategy
There are a variety of strategies, from scalping and day trading to hedging, momentum trading, and long-term investment and news trading. While you are on your demo account and in the process of learning the ropes, everything will be much clearer to you.
Naturally, you will pick up the strategy that matches the amount of time you want to dedicate to this business activity and your personality. Short-term strategies such as scalping and day trading usually bring more stress. Anyway, Forex trading might turn out to be stressful to many people, so check out your psychological side before you enter the trading boat.
Use backtesting
Relying on historical data is an excellent way to see how the previous data were performing and what trading decisions could have been made. Also, it allows you to have a bigger picture of the market itself and to develop your intuition to avoid trading to one unknown and uncomfortable process for you.
Choosing the broker
For some, opting for the brokerage service might turn out to be difficult since they don’t know what to search for and where to start. Well, starting with the reading reviews of many brokers, comparing their offers is the first recommended step.
See if the broker offers a demo account, , free education, and many trading instruments. Check what are the spreads and leverage and see how it complies with your trading plan. You shouldn’t neglect the importance of customer support. You will need their help at least twice during the trading process.
See how they are operative and double-check the information regarding trading conditions and terms. The devil might be in the details. Don’t cry over your negligence and laziness and put in the effort to find a really trustworthy trading partner during your Forex trading journey.
How can one start trading Forex?
No matter where you live, thanks to the internet connection, you can access the market anytime. But that’s not the point. The point is to start on good grounds with the right broker and enough knowledge.
Escaping from the scammers is already a quiet achievement since you haven’t lost your money for anything without even starting to trade. When you find a broker that seems good to you, meaning you have all the proper tools for trading, a demo account, decent minimum deposit, and leverage offered, start thinking of your trading plan.
We have to stress the importance of the Forex compounding calculator here since it is a really useful tool that will help you check your trading plan’s viability besides if your strategy is a compounding strategy: congratulations! That’s a very good way to make profits gradually and steadily on Forex, and this tool will help you.
Finally, when choosing the broker, pay attention to the transparency of the trading details, conditions, and terms. Always double-check every info you stumble upon. Check also their customer support. Do they speak your language or not? The forex market is lucrative but also a playground for dishonest people. Make sure to shield you from them and make your trading journey as pleasant as possible.