A Complete Guide To Everything You Need To Know About Forex Trading
Also known as currency trading or foreign exchange, forex trading is a global market where currencies from different parts of the world are traded.
You may be wondering why you should invest in forex trading as opposed to investing traditional investments form such as real estate. Well, foreign exchange is more advantageous than traditional investments because:
- No middle men – With forex you don’t have to worry about a salesman overselling his products to you. You get to trade on the market directly and make informed decisions by yourself.
- High liquidity- Currency trading is enormous and extremely liquid. This is advantageous because you can sell and buy at the click of a mouse.
- The market is open for 24 hours so you can trade any time of the day, even at evening after you get home from work.
- No paying commissions- You don’t have to worry about paying governments fees, clearing fees, or exchange fees.
- Free training- Online forex firms offer first-time traders “demo” account that allows them to practice trading along with charting services and real time forex news. This will greatly sharpen your skills before you start trading in the real market.
- Low barrier entry point- You don’t have to start trading with ton of cash. Some online forex firms offer micro and mini accounts that require you to deposit just $100.
After choosing to invest in FX, the next thing on your to-do list is learning how to trade in forex.
Forex Trading Simplified
Some Frequently Used Terminologies Are:
- Currency pair- The pricing structure and quotation of currencies traded in the foreign exchange market.
- Base currency- This refers to currency you will be using.
- PIP- This is the smallest change in price that any given exchange rate makes.
- Cross currency pair- This refers to two currencies that are traded without the inclusion of the US dollar.
- Quote currency- This refers to the second currency quoted on a forex currency pair. The quote can be a direct quote, foreign currency, or indirect quote, domestic currency.
- Long position- This means you will sell your quote currency and buy base currency.
- Short position- This means you will sell the base currency and buy the quote currency.
- Offer price or ask price- is the amount at which your broker sells base currency for quote currency.
For one to trade, they would need to first open an account with a reputable online forex firm.
Then pick currencies to trade. After this they would analyze the market through sentimental analysis, technical analysis, and fundamental analysis.
Then they calculate their margin and place their order. According to their prediction they would make a profit, in most cases, or loss.
So, for a beginner, how do you know which firm to open your trading account?
Choosing The Right Trading Company
For a trading company to perfectly match your needs, it should satisfy the following requirements:
- It should have a 24 hours customer support center.
- It should be a member of the NFA (National Futures Associations) and should be registered with the (CFTC) US Commodity Futures Trading Commission.
- Should offer a wide variety of currency pairs.
EasyMarkets is a forex trading firm that satisfies the above requirements.
My EasyMarkets Review
EasyMarkets is an industry leader in the foreign exchange market. This company was established over 16 years ago and has provided outstanding services, earning them over 40 international awards.
To date, there are more than 100,000 active traders and more than $1.5 trillion in trading turnover.
EasyMarkets has a trading platform that allows you access to a standard account, with possibility of upgrading it when you want. This account has a wide range of currency pairs and it gives you access to over 300 markets.
These are the reasons you should trade with this firm:
- They are regulated by ASIC and CySEC
- They have vanilla options, Islamic accounts, and free demo accounts.
- 24 hours customer support
- Low deposit amount ($100)
- You can sharpen your skills through their learning center
- This firm is known for its transparency and simplicity.
Investing in traditional methods is okay but foreign exchange is an option because of its low cost of entry, free training, and an open market.
A trader must establish good trading habits and learn how to make the right predictions in order to make profits.
Established online trading firms, such as easyMarket.com, help to introduce a beginner to the possibility of forex trading if they wish to.