Hello, dear seekers of notes! Let’s talk about a concept like Forex. Many of course have heard this term, but not everyone has the right idea of what it is and how it works. At the same time, everyone knows that money is made there, and this of course causes genuine interest among the majority!
As a rule, those who have never tried to immerse themselves in the topic of the exchange, believe that Forex is something highly complex that requires certain knowledge and skills. Some even believe that this is a waste of time where you can only “drain” money. Which, by the way, is also true in some way.
This article is by no means motivating. There will not be instructions on the topic: “How to get rich quickly.” Because the trader’s income (this is the one who trades on the Forex market) depends only on him and this story is not fast and not simple. This article will tell you in simple words about what Forex is?
What is Forex?
Forex is an international currency market. You, as a trader , buy or sell a currency and get income (or loss) depending on the exchange rate. What is now extremely important, for the time has come for good changes in the dollar rates. For example, you buy a dollar at one price, and when the dollar rate rises, you sell it at a higher price. The difference in courses is your income. Or, on the contrary, you sell at the same price, and buy later at a cheaper price when the rate falls.
Many try to earn money in banks for Forex trading, but they do not understand that banks earn money on it. And from this it follows that it is possible to make a profit on the difference in the rate only in the case when the rate has changed 10 percent. So it was, most recently, when the dollar rate almost doubled in a relatively short period of time. Then it made sense to buy / sell through the bank. Now the course has stabilized and it is not very profitable. In the Forex market, the situation is quite different.
The newcomer to the exchange may be asked: where will the high income, if the exchange rate for the most part varies slightly? The fact is that currency quotations on foreign exchange markets differ from those that we used to see in bank branches. The course in the Forex market is measured up to ten thousandths and changes almost every second.
Simply put, let’s say the euro is now worth 1.3400 dollars, but after a minute the price can rise by ten points and the euro will cost 1.3410 dollars, and this can already earn (or lose) 5, 10 or even 100 dollars, depending on how much you buy. or sold. That’s because when you make a deal, you buy (sell) immediately a hundred, thousand, or even a million units of currency.
If you speak in simple words about trading on the Forex market, then you trade through a brokerage firm or a dealing center that gives you a leverage, for example, 1 to 100 (margin trading). This means that with $ 100 in stock, you can trade for a sum of 100 times more, that is, $ 10,000. Here, of course, you can be scared of the word “credit” and immediately panic, thinking that you will have to return huge sums. Not really. You will never lose more than the amount entered into the market.
If you trade for your $ 100 and the market situation does not go as you planned, the broker will automatically close the deal when your loss approaches $ 100. This is the advantage of the foreign exchange market – you can get much more than lose. However, it is immediately worth noting – you have to try very hard to lose absolutely the entire deposit (subject to trading through a real broker, and not a false one).
Therefore, avoid the so-called “kitchen brokers”, work only through real, having access to the stock exchange of the company. Look for reviews before you trust. Register on the traders forum, ask for recommendations there.
Then the question arises: how to trade currencies directly? You can trade in the Forex market without leaving your home with the help of a special program on a computer – a terminal. Located on the broker website. First you need to practice on a demo account and only after that trade for real money. In general, it makes no sense to write a lot about the principles of trading in the market, because you can find the entire algorithm of your actions at the broker, that is, on his website (link above, in one paragraph). For many, this is in the form of a video presented. So understand Forex even easier.
The essence of trading a trader is to analyze the market and understand where the price will go. For this, the trader uses technical and fundamental analysis. In technical analysis,with the help of graphs and mathematical averaged indicators that have already been calculated in the program, they predict how the market will change, based on the indicators of the previous period. Fundamental is more global and focused on tracking macroeconomic news.
Professional traders use data from both analyzes, this is already half the success.
A very important factor when trading on the Forex market is the psychological factor. It is necessary not to confuse Forex and casinos. In casinos, the winnings are built on the theory of probability (or rather, the presence or absence of the owner’s conscience). In the foreign exchange market, it is pointless to rush into excitement, because it is not a game. It is better to take it as one of the ways to invest on the Internet . Decisions must be made on the basis of the analysis done and cold calculation.
You need to strive to build your trading system in which revenues significantly exceed expenses. Loss-making transactions will always be! It is necessary to analyze them without giving in to emotions. Build your strategy so that profitable transactions will certainly cover unprofitable and bring you income.
You can write about Forex very abundantly, but a beginner will not understand anything in this market anyway, at least from the first time for sure! Read the literature with a financial bias, study exchange rates, try. Over time, you will understand. In principle, with Forex trading, everything is simple – today I bought dollars, tomorrow I sold, I bought euros, and so on.
I wish you successful bidding!