The forex trading also known as the Fx or foreign exchange market or currency exchange market, is a market where various world currencies are exchanged. It can also be simply put as the buying and selling of the different world currencies in an attempt to make a profit from the changes in the currency exchange rates.Forex trading can be a big source income (if you have a good coach) and also a great hobby.One can make a lot of money by investing in forex trading and correctly predicting the direction of the market.
How Forex trading Works
-Forex training. First you need to undergo a thorough forex training. A good forex training is the key to a successful forex investment. Forex training includes: understanding forex quotes, forex currency exchange patterns, forex terms, forex forums and a lot more.You can look for Forex trading videos online and watch how the forex trading market works, learn how the market fluctuates, the causes and the effects, learn about the popular currency pairs and understand their patterns, in addition you can play free Online forex trading games to get a better understanding and grasp of the market.
Before engaging in forex trading,first one needs to understand the basic forex terminologies. for example:
The base currency: This is the type of currency you’re selling.
The quote currency: This is the currency that you’re purchasing or buying.In forex trading, you normally sell one type of currency to buy another type of currency.
The bid price:This is the price at which a broker is willing or ready to buy or purchase the base currency in exchange for the quote currency.
The ask price(also called the offer price): This is the price at which a broker is ready to sell the base currency in exchange for the quote currency.
-Look for a mentor to teach you the ropes. Training and proper practical education is the key to a successful forex trading market. Look for someone who trades in the forex market daily. Someone who makes real money from forex trading.
-Once you have found a good mentor/teacher to guide you, you can now open a forex demo or trial account to test and try the forex trading platforms without you risking any real money.By using trial or demo trading accounts with different brokers, you will understand the many different platforms and identify which platform suits you best. Manage and train with the demo accounts until you complete the training and your mentor approves of it. Follow your mentor’s advice and wait until they tell you it is okay for you to trade with a live forex account or until you’re really sure you understand how the forex market operates.
- Always keep a record of all the trades on your demo and live accounts. By keeping a record of all your trades, both the winning and the losing trades, you will be able to learn a lot from them. You will see what you were doing wrong with your demo account in the losing trades and what you were doing right in the winning trades.You can evaluate these trade and then duplicate the winning strategies in your live account and avoid the mistakes.
- Now decide whether you will use a broker or trade by yourself.Consult your mentor for advice.
-Choose a pair currency to trade.The most popular pairs at Forex are EUR/USD and GBP/USD.
-Always remember to pay attention to both the Local news and the international news. Watch business news networks, read economic reports, also keep an eye on politics for they usually affect the currency exchange rates. For example, if a country is having a National election, the country’s currency exchange rate will probably appreciate if the elections winner has a fiscally good agenda.