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Business & Finance

Oil Trading Negative, Next is Gold – Forex Trading Guide for Beginners

With recent fall in oil prices, the global scramble for liquidity is sparking a chain reaction of asset sales, unwinding of complex trades and margin calls. Gold might be the next in line as quoted by Elliott Wave chartist Henrik Zeberg;

Henrik had called this massive down move in oil back in November 2019, when no one believed it;

Forex, or Foreign Exchange trading, is the buying or selling of foreign currencies, usually as a preemptive measure to predict the change in the value of a coin. By correctly predicting the rise or decline in a currencies value, and investing or devesting in said currency, can be a lucrative way to make some serious side cash, and with the right training and experience, even create a full-time income by trading Forex.

In this extensive article, we will go over all of the basics of Forex Trading, as well as some terms that you will need to understand, such as leverage trading, and margins. We will also explore some of the most popular currencies to trade, and how a beginner can start making a killing buying and selling foreign exchange currencies.

What is Forex?

The Foreign Exchange is a decentralized market which is used globally to buy and sell many of the worlds most used currencies. It is an over the counter market, where the value of each currency is obtained sold and traded against each other. The Forex market allows the global exchange of money and is one of the fundamental ways in which economist determine the price of a currency.

The Forex system allows countries and large financial institutions to trade between each other in their respective currencies, for example, if an American company regularly imports goods from China, the Forex system would allow them to exchange American Dollars for Chinese Yen, so that both parties would, in essence, be able to trade regularly without the need to acquire the other parties currency.

Forex has revolutionized the global trade market and allows anyone to purchase foreign currencies easily and for the best value. Many traders have found great success using the Forex market for their day trading strategies, as the volatile nature of currency valuation is a great way to earn money.

Why Choose Forex?

When trading stocks and bonds, those without severe amounts of cash to invest are extremely hindered in their access and functionality of the stock market. Day trading limits stop those with lower prices of investment capital from buying and selling stocks over a day by day time period. Forex trading is not burdened with such requirements, and traders can buy and sell shares to their heart’s content.

Forex is also extremely understandable as opposed to stocks and bonds. However, the research can be just as intensive when making big financial decisions, and the currency market can be a lot easier to digest and comprehend starting off.

Forex is also great for beginners due to its extremely low entry cost. Many brokers will accept currency trades of extremely low value, and the commission is lower than you would pay for stocks and bonds.

How to Get Started with Forex?

Getting started with Forex is an extremely simple process, but before you start investing, there is a little bit of homework to be done, and some essential keywords you should understand. The following is a list of all the terms and phrases you may come up against when conducting your research.

Leverage

Leverage is the action of using your current portfolio balance to effectively finance trades by borrowing cash from the broker. It allows you to generate larger profits on correctly prospected trades while mitigating the risk that would usually come when trading such large amounts.

Pip

Most currencies are valued to 4 decimal places, and the pip is the change in value that takes place at this level. The US dollar is priced to 4 decimal places; therefore, one pip would constitute a hundredth of a per cent.

Broker

A broker is a person who has direct access to the currency market. All trades you make as a trader will regularly go through a broker to be executed. Most brokers charge a commission on each trade that they execute on behalf of a customer. Brokers are an essential aspect of Forex trading, and finding a broker you trust with your money is an essential aspect of trading Forex.

Once these terms have been learned, and your research has been completed, the world of Forex is yours for the taking, and the way you earn your living will never be the same.

Collins Valentin

Collins is a blockchain enthusiast, who spends his time between documenting the blockchain revolution in Africa, and writing the latest on the cryptocurrency space. Email: editor.news@blockpublisher.com

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