Forex market

How is the Forex market suitable for beginners?

Forex, also known as foreign exchange, is the buying and selling of international currency as a continuous trade in an independent environment. Unlike the stock market, the foreign exchange industry is not regulated by any central authority, which makes is easily accessible to new traders. In the past few decades, investments in foreign exchange have seen a considerable increase in the number of traders and the amount invested. On average, the foreign exchange market amounts to more than 5 trillion US dollars in a day while the stock market floats at roughly 200 million US dollars in a day.

market amounts

The whole idea of trading in currency originated after the implementation of the Bretton Woods system by the International Monetary Fund in 1994, which established the US dollar as the primary currency for all international trades. This gave birth to forex, the trading of two currencies by private parties. As of now, forex has become a force to be reckoned with, and it attracts a higher number of new traders than the traditional stock market.  Since any central authority does not control forex, entry and exit become very easy.

Foreign exchange proves to be more comfortable for a new investor as it does not function using a lot of variables. The stock market has millions of listed companies to choose from, and that becomes a tedious job. The forex market is limited to the number of currencies present, and people mostly trade in the high currencies which narrows down the spectrum even further. Given the endless list of shares, the stock market requires you to be on the spot with your research and knowledge. Missing the business news on any beautiful day might cost you a fortune. The stock market is a highly sophisticated industry; minute changes in this industry can cause the market to crash. The forex, being an independent trading platform, requires less effort as compared to stock trading. The international currencies fluctuate daily, but it is relatively easy to understand the pattern and come up with multiple algorithms(must watch) to excel in this industry.

industry

Since forex is an open platform, the competition between the brokers is very high, and this reduces the charges of trading to a relatively lower point. But this same open platform gives spine to frauds and schemers, and it becomes comparatively easy to cheat new traders and flee with their money. The leverage in the forex market is another double-edged sword which can cause collateral damage. The leverage ratios for trading in currencies stand at an average of 50:1 while the same for the stock markets 2:1. Given this high leverage, it becomes easy to obtain large profits in a smaller amount of time, but the risk of losing it all escalates at a quicker pace.

fund

How do you fund a Forex account?

A forex account is nothing but a foreign exchange account which is used by investors and traders to trade in foreign currency by keeping their home currency as the base unit. All foreign currencies are registered on this forum, and its services can be availed by creating an account and depositing money in your country’s currency. The minimum investment required to begin trading is a thousand dollars. You can select any forex broker and set up an account with them. It is advisable that you first create a demo forex account

thousand dollars

These forex accounts are popular as they carter to a large number of audiences from different parts of the world. Once you are familiar with the demo accounts, you can move ahead with the permanent funded accounts like mini accounts, managed accounts and fully funded accounts. With an increase in the number of brokers available in the market, the maintenance and running cost of these accounts has significantly fallen. Begin with creating a demo account and then moving on to a managed account, if you are sure that you have learnt the art of trading and are familiar with complexities of investing you can create a funded account and be the master of your dreams.

Funding a forex account is relatively easy to learn, the user can transfer the desired sum using a variety of methods like online banking, cash deposit, bank transfer and the most usual way is by using a credit card. You will have to enter the details of your card into the system, and the money will be directly transferred into your trading account. These transfers are either instant or take up around 24 hours to complete the transaction. Many sites offer you practice trading simulators which are available online for you to practice trading before you jump into the real world.

available online

You must go through the terms and conditions provided by the broker and get to know about the charges for transferring money from your bank account to your trading account. This will vary from one bank to another, but in most cases, the fee is set at a minimum so that it becomes appealing to the users and they are encouraged to feed more money into the trading account. Before you fund your account, gather enough information about the authenticity of the broker. You might regret it later if the broker service turns out to be a phoney one. Cross-check all details and gather intel on the broker, ask you licences and read reviews, only then proceed with depositing your money in the trading account.

Forex

Difference between Forex and Stock trading

People who are new to trading get confused between the forex market and the stock market; they even use these terms interchangeably. Forex stands for foreign exchange, and it is the trading of currencies in the international market.  This is a highly liquid market, incurring more than 5 trillion US dollars in a day. On the other hand, the stock market is a highly regulated industry with a low volume, bearing about 200 billion US dollars in a day. Stocks have been popular for a very long time and are considered to be a safer medium of trading while forex is relatively new and has gained momentum quickly in the past few decades.

Forex stands

The stock markets, all around the world are centrally regulated by authorities which gives them more of physical quality and make it safer for the investors both new and experienced. Popular exchange markets are the New York stock exchange in the West and the Bombay Stock exchange in the East. Any central authority does not regulate the forex market, all transactions are done in an over the counter manner, privately between the two parties involved in the deal, which makes the stock market a favourable choice for experienced investors.

Both these financial markets are user friendly, but forex attracts the new traders more because of its low brokerage rates and minimal cost of entry. Forex allows you to earn large amounts of profits in a short period of time, but the risk is also very high as compared to the stock market. Stock trading can only be done for a limited window of eight hours, commonly refers as 9 to 5 while the forex traders can indulge in deals 24/7. Since forex is not under the control of any central authority, the risk of being cheated and schemed is way higher than in the traditional stock market.

foreign exchange

The primary difference between foreign exchange and stock trading is that when currencies are traded, there is always one buyer and one seller engaged in exchanging currencies at the same time, there is no option of holding on to the investment. A stock market is a place where you buy a share in exchange for money when the market is down, and you hold on to that stock until the market rises and you sell it with a profit.

The forex market is famous because it provides a very high leverage point somewhere around 50:1 on an average. This is both an advantage and a disadvantage as this increases the chance of getting a profit, but it also escalates your risk of losing all of it. The stock market is a much calmer pool with the average leverage being 2:1, the only problem with that is, if you want to earn substantial profits, you will have to have huge capital.

Is Forex Trading Really Profitable And Can You Do It?

Is Forex Trading Really Profitable And Can You Do It?

Every aspiring Forex trader will end up in the skeptical phase of whether they need to carry on with it or not. The biggest question that baffles them is if the trade can bring them profits as much as they anticipate. This question often pops up in the mind of retail traders who are not able to succeed with their approach towards trading. The strategies they use are never considered to be in their approach towards the trade since they cannot have any application as long as the approach is a failure.

You must check through the different approaches when you start with your first trade and stick to the one that yields the best results. Only then will you be able to clear the way through the dark tunnel towards the light at the end. Yes, there surely is a bright light to forex trading, but to make money out of it isn’t as easy as it goes. Plenty of traders even today, make money out of the profitable category of forex trading. Forex charts and technical analyses can be used to update your trade and make a profit out of it. Making money out of the trade is different from keeping the profit, which makes it essential to understand the working of forex trade and its chances to make a profit. Let us dive deeper into the profitability of forex trade.

What Do You Need to Do as a Trader

What Do You Need to Do as a Trader?

When you step into forex trading, the first thing that you should check is the risk that each trade entails. By doing that, you are expected to become an efficient risk manager so that your trades remain unharmed. An intrinsic risk comes with every trade, which if taken to large extents, can affect you and end up in losses.

When applying your plan of trading, consistency plays a key role since it is the factor that adds to your profits, allowing you to reap benefits out of every trade. You could face a losing streak where the account of yours could fluctuate. If you use a positive expectancy strategy for your trade, you can make profits over the long run. Having a proper mindset to face all the losses is also important here because your account goes empty at times, and even at that point, you should be expecting more losses because that is how this works.

How Is Forex Money Managed and Profits Made More Probable?

Wins and losses follow a random pattern; so, you will need to expect all kinds of results from the trade. You must learn how to manage forex money; by trading a lot, you are putting yourself at risk. Don’t be disheartened by the day to day losses or be overexcited about wins as well, because your focus must be on the long-term profit.

Every trader who implements his/her plans consistently has better chances to reap more significant profits. Stop shifting from one approach to another since that will only teach you about the bad phase of every trade. Instead, go with a particular approach and find out where things went wrong to rectify it the next time. All these points make the statement clear that forex trading is profitable, but that certainly depends on your mindset and approach towards it.