Forex Trading

The market where global currency trading is called the Foreign exchange. Foreign business and trade needs foreign exchange to exchange currencies and is an important factor to a majority of people around the world. This applies to buying goods from other countries, travelling, and more. You need to change your currency to the currency that applies and is accepted to the country you are buying from or travelling to.

The forex market is the most liquid, largest financial market globally due to the constant demand to exchange currencies.

One distinct feature of forex is that there is no centralized exchange or no central market, and all transactions are done online between traders around the world. Trades in the forex market are done across the globe, across all time zones, 24 hours a day for 5 days a week.

Future Markets, Spot Markets and the Forwards

These three are the ways that individuals, corporations and institutions can trade forex.

  • Future Market and Forwards

These markets deal with contracts of claims to a definite type of currency, a specific future date to settle and price per unit.

Forwards market purchases and sells contracts between two parties OT who decide between themselves their agreements.

The futures market deals with contracts of public commodities market that are sold and bought with a standard settlement date and size.

These two markets offer security when trading currencies against risks. These both have binding contracts, and are typically used by big international corporations to safeguard themselves against fluctuations in future forex rates.

  • Spot Market

This is the market for buying and selling of currencies in relation to their current prices, which is also determined by demand and supply. This can be used to see economic performance, current interest rates, perception of the currency performance in the future of one currency against the other. The spot market deals with cash and transactions are in the present.

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7 Must-Read Tips for New Forex Traders

Thousands of new traders join the Forex market each day. What’s nice about this kind of trading is anyone can be efficient in it given that they follow the right technique. The bonus part is that it can be done online, wherever you are. If you want to gain in trading Forex consistently, here are the things you need to apply right from the very beginning of your journey:

 

1. Don’t be fooled into trading real money too early in the game.

One of the mistakes beginners make is assessing the results of a trade with only a little data sample. You cannot simply start trading in just a few days since learning about a new trading strategy.

 

2. Educate yourself first.

This is common sense but unfortunately, many people get into trading without having enough knowledge about it. Before you invest in trading, invest in knowledge first. There are many training courses out there that will help you learn about the basics.

 

3. Don’t look at the lower time-frame.

Many traders commit the mistake of looking at lower time frames expecting that they could come up with a good trading decision from it. Experienced traders don’t do this. Instead, they consider the daily charts when making a trading decision.

 

4. Avoid trading on your opponent’s terms.

 

Many new traders have the tendency to trade with their opponent’s terms in mind. If you want to be a successful trader, never ever chase the market. Instead, work on trading using your own terms at prices you can afford.

 

5. Learn how to manage risks.

It is critical to know how to manage risks properly. In other words, you have to be aware of how much you are willing to sacrifice from your capital in a day of trading. You should only be risking 2-percent of your entire capital for just one trade. Proper risk management will keep you staying in the game. Without it, you could easily give up.

 

6. Study the art of controlling your emotions.

As a new trader, it is normal to feel many kinds of emotions. A huge drawdown can happen to anyone. Are you prepared for the frustration and disappointment that comes with it? If not, then you better control your emotions as early as now. Think like a human but don’t let any of your emotions get in the way, as if you are a machine!

 

7. Enjoy the process.

We said you should not let your emotions control you. But that only pertains to negative emotions that may come along the way. Enjoy your new venture because when you love what you do, you will work on improving yourself even if things are not going according to plan.

 

Lastly, don’t forget that overtrading will be too risky for you as a new trader. You will not get a return of investment from placing all your trades in just a single day. It is easier to risk a small amount. There is less disappointment and less frustration if you ever lose.

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