In commerce or Trade Industries, at some point in time, money attracts more money.
If one wishes to make vast piles of money, one must invest an adequate amount of money to create an enormous reserve of wealth.
Now, a question arises in minds who come across this statement; how can one attract money with money?
So, in this article, we will provide you with some fundamental insights into the world of forex investing.
The reader should consider this article as being an absolute beginner’s guide to Forex Trading.
What is Forex?
Forex or Foreign exchange market or currency market or in short FX is a disperse Global market. Here, currency exchange transactions like buying, selling, exchanging and speculating on exchange take place in an over the counter market format.
In forex markets, the currencies usually trade in pairs known as currency pairs. For example, JPY/USD, USD/GBP, etc. The first currency in the pair is termed as Base Currency while the other refers to as Counter Currency.
It is a network of buyers and sellers. It converts foreign currency at an agreed price for individuals, companies, forex traders/forex brokers, investment management firms, hedge funds, and central banks, etc. That forms a big part of the Forex Market.
Features of Forex or Foreign exchange Market
- Forex is the exceedingly large valued liquid market in the world, which has a tremendous trade volume of $5 trillion a day.
- Forex market is not in an exchange that allows forex traders to trade 24 hours with any time boundations.
- It is both a spot and derivative market. Currency trading happens on computer networks or the internet among currency traders.
- 90% of transactions that take place in the forex market are in US Dollars. A foreign government, individuals, and institutions are controlling 66% of the US currency.
- 90% of all tradings fall under the speculative category trade.
- The retail traders generate 5 % of the total volume in forex investing.
- 41% of forex transactions take place in the United Kingdom and Deutsche bank is the largest Forex dealer with a share of 21% of the forex market.
How Forex Markets Works?
The Forex markets are functional 24 hours a day. One can invest any time in the forex market. Those who wish to spend in the forex market have to visit a bank or financial institution and create an account to start forex trading electronically. You can also begin to forex investing via Forex trader or a Forex Broker.
The Forex market exists in the form of three markets which are listed below as follows :
Spot Market is a form of forex market where one can notice the immediate transactions regarding the buy and selling of the currency. It takes place in the Forex market or foreign exchange market. In the spot, market currencies trade at the current exchange rate. We also call it Spot Rate.
All the transactions that take place in the future market are consistent. All transactions are carried out based on the exchange rate known as the Future Rate. It implies that these transactions involve future payment and delivery at an agreed exchange rate.
The Forward market is identical to the futures market. The only exception that these markets have is that terms prevailing in these markets are negotiable between the two parties involved in the forex trade.
What is Forex Investing?
Forex trading is the process by which the currency of one country converts into the currency of another at a specific price. Forex investing is also known as FX trading, Currency trading, and Foreign exchange trading.
The Forex Market allows one to trade 24×7 in a wide range of currencies. In this, the currencies always trade in pairs, and Forex Traders make speculation regarding the rise and fall in Price of Currencies of one country over the other Country currency.
Recommended Read: https://fxreviews.best/blog/investing-in-stock-market-in-covid-19/
Step By Step Process of Forex Investing
Forex trading has the potential to be a perfect hobby and income source. Now we will outline steps that will enable all those people who are very enthusiastic about starting trading in the Forex markets.
Step 1: Gather Full knowledge regarding Forex Trading
To be able to trade in the currency market, one should be aware of all terminologies and Basic concepts regarding the forex market. One needs to invest and devote adequate time to educate and gain full knowledge. You should be aware of basic forex terminology.
Step 2: Opening a Forex Brokerage account
When you have read an ample of books, researched on the internet, and have courses regarding Forex Investing, now it is time to get a Forex brokerage account. It is advisable to conduct comprehensive research about different brokerages.
While researching and choosing a forex brokerage account, one must consider the following factors such as :
- Broker companies should have a presence and experience of 10 years and above in the forex market.
- The brokerage should be authorized and regulated by the government oversight bodies.
- Visit the Broker website, check how many products companies offer, check transactions cost and read documents and reviews carefully.
Step 3: Open an account and decide which currency to trade
After deciding on the brokerage company, the next step should be to reach out to the company executive to complete necessary formalities.
As soon as your account activates, there will be a requirement to choose the currency to invest. You can approach advisors or can conduct internet research.
Step 4: Do a regular analysis
When all the things mentioned above accomplish, it is time to buy currency by placing orders on broker websites. After the exchange, you should stay informed and follow current trends for buying and selling.
To Conclude this article, I would like to give some tips that will help in curtailing the loss probability and widen the chance of profitability.
The tips are as follows :
- Before investing real capital into forex markets, start with a demo account. It helps in accessing the process of forex investing and can determine if forex beneficial pursuit.
- Never get emotional while trading in the currency as the currency market is volatile, where a lot of ups and downs will happen.
- You should begin with 2% of total cash initially, as one may need sufficient money to cover the downside.
- One important thing, check whether the broker company has a physical address. It can mitigate the chances of fraud.