Forex Trading for Beginners- Here’s a Complete Guide
Every day, thousands of newbies join the world of Forex trading. More often than not, these new traders were attracted to Forex trading because they believe that it’s an easy way to make money. They dive right in without first leaning how it works. If you are a brand-new Forex trader, don’t make the same mistake.
Even when you feel that you have an idea of how it works, it’s still vital to get the best possible education on Forex trading for beginners. The financial markets are continually evolving, and therefore you need some basic knowledge if you have to keep up with the trends.
Why is Forex Trading Popular?
The Forex market is considered the largest market by the dollar value of trading volume. It’s also the most liquid financial market in the world. Three decades ago, Forex trading wasn’t as popular as it is now. It became popular as people adopted the use of the internet. Initially, Forex trading had been limited to large institutions such as hedge funds and banks, but with the rise of the internet, brokers offered this asset to more people.
One of the things that make forex popular is because it’s an investment that small investors can access. Becoming a currency trader doesn’t require a lot of start-up capital. To get started, you don’t need as much money as you would need when investing in commodity futures or stocks. Many Forex traders open trading accounts with as little as $50.
Another thing that attracts people to forex is that it provides many opportunities to make profits. Remember that the Forex market doesn’t close. It runs every day for 24 hours, giving traders a chance to trade day and night. Therefore, the possibility of earning a living through forex trading lures many traders to this lucrative business. Besides, trading Forex has few or no taxes compared to other investment instruments.
Is Forex Trading for You?
If you are new in Forex trading, you are probably wondering whether it’s the right thing for you. Firstly, Forex trading isn’t for you if you are after making quick money. The reason many new traders lose their money is that they venture into Forex trading without developing the skills needed to trade.
Also, Forex trading isn’t for if you don’t have spare money. One major downside of forex trading is that the market can be highly volatile. If you lose more than once, your account can quickly run to zero. So, you always need to have a backup in case things go south. Do not invest money that you need to live on. The rule of thumb is that you should invest only money that you can afford to lose.
Forex trading isn’t for you if you don’t know what you are doing. Before you venture into Forex trading, take time to understand the basics of the market. Read books, attend seminars, watch videos, and practice with a demo trading account. It’s always essential to invest your time before investing your money.
Lastly, forex trading isn’t for you if you don’t have time. Sometimes, you will need to spend considerable time observing the markets. Forex trading isn’t something to get into if you are always in a hurry. Everything about Forex takes time right from the training to the actual trading.
What are the Most Traded Currencies?
Forex trading takes place all over the world, but most of the trading activity revolves around five countries. They include the United States, United Kingdom, Singapore, Hong Kong SAR, and Japan. Remember, these countries have their own currencies, but the American dollar is the most traded currency in the world.
The American dollar became the world’s reserve currency after the Bretton Woods Agreement of 1944. During that time, the American dollar was the only currency that could be converted into gold. The USD is stable and reliable, which makes it the standard in the international market.