Forex is the fascinating world of currency trading. It’s a one man business where you are responsible for your decisions. It is the only market which works for 24 hours a day. So it gives you the flexibility to work whenever you like, may be as a part time job or after work hours. It’s a huge business with an average daily turnover in excess of US$4 trillion. This is giving an opportunity for everyone to earn an extra income.1. What is Forex?
Foreign exchange (forex, FX, or currency market) is the international trade from one currency to another. It is the buying and selling of different currencies.
It’s similar to a stock market where you buy currencies at a lower price and sell them when their price increases. If you have the experience of selling and buying of stocks in stock market, it’s very easy for you.
Trading in Foreign exchange is normally done in pairs like EUR/USD unlike the stock market trading individually. EUR/USD, GBP/USD is the most famous pairs of Forex. US dollar is the standard through which currencies trade.
2. Challenging Business:
This is for the kind of people who love challenges. Every day will not be the same, one day you may gain and the other day you may lose some money. You need to take this business only if you are serious about it. Make sure you have sufficient knowledge before you jump into this business so that you can manage maximum returns for your capital.
You need to understand how economies work, trade between countries. For example: How does importing and exporting of a country work. Do they pay in common currency common to both? And so on.
3. Learn the Basics :
The first things you need to learn are the basic rules of the forex, trading and importantly the impacts. You need do a lot of research on free resources like eBooks, forums and good websites related to online Forex trading for tips and tricks of Forex.
Watching the financial news sources like Bloomberg and CNN will increase your knowledge on the subject. You will then have an understanding on the Forex Trading Strategies.
4. How to Start ?
Start with a Demo account, practice a lot until you get a good knowledge and ready to trade online. There are a lot of brokerage companies available online, choose a good company which is reliable. All this works on the trading software/platform which will be installed to your system.
When you are ready fund your account and you will be assigned to an account manager who will help you in your business.
The software will automatically convert your money to the trading currency. Now you can choose the currency you want to buy or sell.
5. How it works :
If you have observed a money exchange center, you might have seen that the buying price is less and the selling price is more. Never invest too much in the first instance but start with smaller amounts. The Four main currency pairs are: British Pound and USD (GBP/USD), Euro and USD (EUR/USD), USD and Japanese Yen (USD/JPY), USD and Swiss Franc (USD/CHF).
Bid is the price at which your broker is willing to buy
Ask is the price at which your broker will sell the base currency
Difference between the bid and the ask price is known as spread.
6. Key Factors :
The key factors which actually decide the game are:
<> you need to know when the best time to sell is and when is the best time to buy
<> Predict when one currency falls and when the other gains value
<> You should be able to decide correctly when to stay and when to drop
<> To be successful in this business you need to be flexible and patient.
<> You need to be good at trading strategies and money management.
