Sometimes abbreviated as FX, Forex is has garnered much popularity in the UK in recent years. Indeed, it is the most traded market in the world as it turns over more than $4 trillion every day. In the foreign exchange market investors speculate and trade on currencies around the world.
Forex trading is affected by a number of factors which make it one of the most dynamic and interesting markets to invest in. Indeed, the value of a currency can be affected by a number of factors such as monetary policy, interest rates and economic stability. In addition, the value of a currency can respond quickly to a sudden event such as politics or a natural disaster.
The Advantages of Forex
Over other types of trading, Forex holds a number of advantages which makes it an attractive market to trade in. To begin with, the Forex market is open 24 hours a day from Sunday evening through to Friday night. These extended trading hours help minimise price gapping and offers greater control than typical markets. In addition, the Forex market does not have a physical location where trades need be made. This allows for greater convenience and thus more potential trading opportunities.
Leverage is another attractive feature of Forex trading. Leverage allows you to only pay a small percentage of your total position as a deposit. This means that investors may be able to make more profit from a single capital outlay than in traditional trading markets as they can invest in a number of different markets. However, if things do not go to plan, leverage can maximise one’s losses.
How to Get into Forex
If you have decided that you want to try Forex trading, finding a broker is the first step that you will have to take. While there are plenty of legitimate brokers online, there are some unscrupulous companies out there. Therefore, it is important that you read up on reviews before selecting a broker. In addition, you should also compare the features of a number of different brokers as this can vary quite considerably. For example, some brokers have better online trading tools than others.
Most reputable brokers offer traders a trial account before trading with real money. These trial accounts not only allow you to try out the broker’s trading platform but they also allow you to experience trading in real-time without incurring any financial loss. This makes them the perfect practice tool for beginners.
Things to Remember
One of the most important things to remember when trading foreign exchange is to never make impulsive trades. You should always be able to justify a trade.
If you make a loss at first, do not be discouraged. See it as a learning experience and try to understand what went wrong. This can help you make more successful trades in the future.
Forex trading is not a ‘get rich quick’ scheme. Indeed, there are a number of factors out of your control which can influence the market. In addition, there is the potential to make substantial losses.