The world of forex is a matrix of numbers, stats and ever shifting decimal places, all of which make earning a profit a tricky task. However, thanks to the evolution of online operators, the market has not only become more accessible to the currency exchange novice, but also much easier to understand.
Today, when you trade forex at traderfair.com and sites of a similar standing, you’ll get access to expert tips, bonuses and affordable trading limits. In fact, it’s this final point that previously kept amateurs traders from making money on the foreign currency exchange.
Fortunately, the exclusivity of the forex world is now a thing of the past and it’s possible to invest just a few pennies and achieve a healthy return with a little bit of luck. However, before you rush off and start picking currency pairs to speculate on, it’s important to outline the nuances of the industry.
The first thing to outline is what forex trading actually is. Based in the currency market, the main premise behind forex trading is to predict whether or not a particular currency is going to get stronger or weaker against another.
To invest on the forex market, you have to choose a currency pair (e.g. GBP/USD) and then place money on whether the dominant currency (the one of the left of the equation) is going to improve or weaken against the lesser. Each notch (known technically as a pip) the currency changes will either win or lose you money based on how much you’ve invested.
For example, if you invested $0.10 per pip on the GBP/USD pairing, then each movement up or down will either make you $0.10 or lose you $0.10. Depending on how much risk you’re willing to accept, you can choose to cashout and end the trade whenever you wish.
Although the process of investing on the forex market is relatively easy, making money isn’t if you’re uninformed. Fortunately, online sites have made things infinitely easier through the following methods:
Daily News Feeds: Just like sports betting enthusiasts, professional forex traders like to keep up with the day’s news. An economic incident in Japan’s volatile markets, as discussed in 2013, will have an impact on the Yen’s performance in the currency market; so it’s vital to stay on top of the latest global headlines. Fortunately, sites offer direct feeds to your account. This means you can stay up-to-date with what’s going on in the world via your desktop and mobile device.
Charting: Collecting market data is relatively simple, but knowing what to do with it once you’ve collated it isn’t. To make life easier, online forex platforms now offer charting tools. Offered in various guises (the more advanced your status, the more complex charting software you’ll have access to), this type of software allows you to plot graphs and track developments over a specified period of time. These charts can then be analysed and used to make better investments.
Leverage: Without leverage, online forex trading wouldn’t be possible for the casual investor. When you’re trading online, the amount you invest is scaled up by a certain figure (leverage). The reason this happens is because forex trading on a major scale involves the buying and selling of units worth millions. Unfortunately, most of us can’t purchase millions of units, which is why leverage is used.
The amount of leverage offered by a site will change depending on the account status of an investor (beginners get more leverage) but an average would be 1,000X. This means your investment amount would get you 1,000X that figure in currency units. One point to note is that leverage can also be dangerous because the more you have the smaller a negative shift needs to be for you to lose a lot of money.
Bonuses: The final reason online forex trading has become more accessible to the casual investors are bonuses. Much like the online casino and poker world, forex operators often give out cash bonuses to new customers. Taking the form of a deposit bonus, the cash usually has to be unlocked before it can be cashed out (unlocked by completing a certain number of trades) and gives people a free way to learn the subtleties of the forex market.
Whether it’s through your desktop site or mobile device, forex trading is now a lot more accessible to the average investor. Although making a million won’t be an easy task, the range of tools offered by established trading sites should be enough to help anyone make a profit if they put their mind to it.