Every time we go on holiday, we’re seeing Forex trading in play. When you go to change your pounds for euros, or your dollars for francs, you will not receive exactly the same amount that you handed over. This is because currencies are traded at the current exchange rate, just as when you trade using an online platform like ThinkForex.
These currency trades that you affect are transacted on something known as the foreign exchange market. What happens in this market is important to us all, whether or not we realize it.
It is not only tourists and those trading internationally who make use of the Forex market. Investors trade from all around the world, exchanging currencies in the hopes of making a profit. Thanks to the necessity of currency exchange, and its global nature, the Forex market is the largest financial market in the world, trading around US $2,000 billion per day.
One way that the Forex market differs from other markets is that there is no central marketplace. Instead, transactions are conducted electronically, via computer networks located all around the world. This means that the market is open 24 hours a day, five and a half days a week, across almost every time zone. As such, the market is incredibly active, and price quotes can change almost constantly.
There are three main ways to trade Forex: via the spot market, the forwards market and the futures market.
The spot market is where currencies are bought and sold according to their current price. This price is determined by supply and demand, and is influenced by many different factors, from interest rates to economic performance, political events, and perceived future events. It is a simple bilateral transaction, whereby one person delivers an agreed currency amount to a counter party, and is handed a specified amount of another currency in return.
As mentioned at investopedia.com, unlike the spot market, the forwards and futures markets do not trade in real currencies; instead, they deal in contracts representing claims to a certain currency type, a set price per unit and a future date for settlement. In the former, these contracts are bought and sold between two parties, who decide the terms of the agreement between them.
The futures market is not dissimilar to the forwards market, although contracts are bought and sold based upon a standard size and settlement date on a public commodities market. Individual parties cannot customize certain details of the contract, such as the number of units being traded, delivery and settlement dates and minimum price increments.
What every Forex trader Should Know
We all know that trading is one of the most lucrative profession in today’s world. But do you really think that making money in the online trading industry is so easy? If you look at the professional traders in the United Kingdom then you will be surprised to see that they are even facing losing trades. But due to their trade management skills, they are able to make money in the long run.
The majority of the traders start their trading career without learning about the details of this market. They simply trade based on their emotion and lose money. Some retail traders often get lucky but this causes them to sustain heavy financial losses in the near future. There are certain things that you need to know before you think about trading the live asset. Without having a clear foundation about this market it will be nearly impossible for you to take on trading as your full-time profession.
Trading is extremely risky and only handful of traders are making money on a regular basis. So if you quit your day job with the hope of becoming a professional trader then you are making a big mistake. You should demo trade the market for the first few months and see how it actually goes. Many traders often don’t know what Forex is trading yet they are trading with a big lot. Do you think they will be able to make money in the long run? The simple answer is NO. You have to understand the associated risk in trading first. No one knows what will happen to your trade. Basically, all the traders are dealing with probability factors to make a profit from this market. So if you don’t learn to embrace the losing trades then making money consistently in the online trading industry will be a difficult task for you.
Fundamental factors in Forex
Do you really want to know what Forex trading is? If so then you can’t ignore the fundamental factors of this market, as described at forbes.com. The majority of the traders are so biased with the technical parameters of this market that they are not giving any importance to the fundamental details of this market. In the eyes of the trained professional, fundamental analysis is often considered as the most powerful price driving catalyst. So without learning about the price driving catalyst, you can never make a profit. We all know that the trend is your friend and if you want to identify the strength of the market trend then you will have to learn more fundamental factors of this market. Even the long-term existing trend of the market can easily get changed within a fraction of a second. So it’s imperative that you educate yourself with the fundamental knowledge of this market to become a successful trader.
Read a lot to become a better trader
In order to become a profitable trader, you have to read a lot about the market. Most of the traders are losing money due to their lack of trading knowledge. They never really wanted to know what Forex is trading. They simply wanted to become a Forex millionaire within a short period of time. But if you look at senior traders then you will notice one thing in common. Every single one of them has a strong reading habit and they always love to keep themselves updated with the latest market news.
Seek help from the seniors
Being new to this industry it will be extremely hard for you to learn about the market details. So it’s better to seek help from the senior traders in the United Kingdom since they will be able to give you clear guidelines about this market. Some of the new traders often go for the paid trading course from the website. But before you do this make sure that the trader has a verified track record. It’s really hard to find a profitable trader with a legitimate track record.