Despite the government's efforts to curb gift card scams and other cyber frauds, they keep increasing daily, and more innocent cit...
Before you pack your bags and start trading currencies, let us give you the basics of this fast-paced world with this beginner’s guide on how to trade forex.
The forex market is the largest and most liquid market in the world. It runs 24 hours a day, 7 days a week, all over the world. Trading in the high stakes world of currency exchange is a lucrative profession.
This is why there are dozens of people daily who want to abandon their careers and shift to forex trading. Before you pack your bags and start trading currencies, let us give you the basics of this fast-paced world with this how to trade Forex beginner’s guide.
Forex is a shortened term for the foreign exchange market. This trading space utilizes how the value of the different currencies of the world fluctuates and changes on a daily basis. It is the largest financial market in the globe, and the most popular one. It has an estimated trading volume of 3 trillion dollars daily.
There was a time when only large corporations, hedge fund senior associates and elites who can freely engage with forex trading. However, with the advent of the internet and handheld smart technology, forex trading has been democratized. At present, anyone anywhere in the world can freely pursue currency exchange, provided they have the basic requirements and the basic financial resources.
Forex market is drastically different compared to their almost famous cousin; the stock market, and it will take you some time to understand how this market works and how to trade Forex efficiently. For one, since there are hundreds, even thousands, of buyers and sellers, the prices are kept low.
At the same time, it runs for 24-hours a day, a lot of current firms don’t charge on commission, one has the ability to trade using leverage and it doesn’t need a big capital to start. Finally, one can put all their efforts on working on specific currencies, meaning you’ll only need to keep track of a couple of economies and several geopolitical environments.
So here’s a brief overview on how to trade Forex: Basically, it’s similar to buying stocks. You shell out a portion of your current currency in order to gain another currency. However, it’s not as simple as that. The currencies are paired together by governing financial institutions. The first currency is usually called the base. The second is called the quote. This shows how much quite is required to purchase the base.
Just to give you a better idea, here’s a scenario: the Euro is usually paired with the American Dollar. The Hong Kong Dollar is paired with the Japanese Yen. If it’s not paired together, you can’t do an exchange. This strict pairing is done to regulate the money that flows in and out of the Foreign Exchange world.
Learning how to trade forex also means knowing the losses. Like any business venture, currency exchange has its own inherent pitfalls. Make sure you have a goal. Gain experience first before shelling out large quantities of currencies.
Study forex charts, talk to brokers and sign up for your forex trade platform. Take the time look at trends and speculate on whether the currencies you’re holding will grow or will falter. It’s okay to take risks, but make sure they’re carefully calculated, and it’s backed up by hard data. The more information you have, the less losses you’ll experience.
Such cryptocurrencies as bitcoin add a fascinating new dimension to currency trading. Some forex brokers have already started accepting bitcoins for currency trading. Now you can trade the cryptocurrency against the US Dollar 24 hours a day/5 days a week on MetaTrader 4 and AvaTrader.
Bitcoin can offer some particular benefits, to be more exact decentralized valuations, no transaction costs and low cost of trading, increased security, low deposit amount and absence of global boundaries.
However, even if you have found a forex broker who accepts bitcoin, you must bear in mind that almost all brokers instantly sell the bitcoins and hold the amount in U.S. dollars. Even if a trader does not take a forex trade position immediately after the deposit, he or she is still exposed to the bitcoin to U.S. dollar rate risk from deposit to withdrawal. To avoid risk of hacking you’d better look for brokers who have insurance protection against theft
In general, bitcoin as well as other cryptocurrencies are becoming mainstream step by step. But it’s hard to deny associated risks. Forex trading sees working with a decentralized currency as an advantage. Choosing only locally regulated forex brokerages can minimize the risk and make your trading successful.
Blockchain, a public ledger underpinning bitcoin, has also been in focus of everyone’s attention over the last months. The technology is believed to transform current financial services. The Australian Stock Exchange (ASX) has recently revealed plans to develop new post-trade platforms on the blockchain technology. It has become one of the 13 leading investors in fintech company Digital Asset Holdings. Altogether the latter raised $50 million. Thus ASX hopes to become the first stock exchange in the world to use distributed ledger technology for public companies.
Patrick Byrne has also come out with something that will hopefully reinvent financial system and eliminate the problem of market fraud. The invention is a trading platform allowing instantaneous transactions called tØ. The platform is created on the basis of blockchain. Byrne supposes that appearance of cryptographically-protected, distributed ledgers led to a true Cryptorevolution.
Thus gradually bitcoin and blockchain step over the bounds of volatile cryptocurrency and its technology. Their application in multiple financial services goes full speed.