Steps to Online Forex Trading
Online trading can be done as a hobby while at the same generating some considerable amount of income. It is very convenient trading in your free time and many people do this as a side hustle to add to their income. If you are considering getting some cash at your convenience and at the comfort of your home, here are some simple steps you can easily follow even if you are doing this for the first time.
The first thing is to learn forex trading terminologies used in the market. Some of the common terms you will come across include; Quote currency which represents the currency you are buying and the base currency which refers to the one you are spending. For instance if you are exchanging south African Rands for the US Dollar, the Rand is the base currency and the Dollar is the quote currency. A long position means that you want to buy the base currency and sell the quote currency and the reverse is true for a short position. Other common terms are exchange rate, bid price, ask price and a spread. A spread represents the difference between the ask price and the bid price
The other step is to decide which currency you want to buy and which one you want to sell. This will require a study of the market news so that one can make correct predictions. For instance, you may note that the sterling pound is rising in value day after day and you will be right in predicting that if you buy it today, tomorrow you will make good profits.
The other important step is to know how to calculate ones profits. This is done in terms of pips where a pip is equal to 0.0001 of a change in value. You multiply the number of pips by the exchange rate to know by how much your account has gained or lost.
Now you are ready to open a forex brokerage account online. While looking for a broker, it is important to get one who has been in the market for a long time preferably more than ten years .It is also important to know how many products the broker offers .Visit their website and learn more about them. Reviews will tell you a lot about a particular brokerage company. Here, you should be careful to know that there are people who are out there to spoil other people’s reputation and therefore one or two negative reviews should not put you off.
Tips to succeeding in Forex trading
Forex trading is quite difficult and needs some skills if one is going to succeed. People who have indulged in this without enough information about it have ended up losing their accounts and some in debts. This is an area that needs skills and information if one is going to make profits. There are also many people who have made millions out of forex trade and therefore it cannot be ruled out as a no treading area in investment.
There are three levels in forex trading namely short term, medium-term and long term. The short term traders are people who want to trade very fast and get returns. In this, an investor risks a larger capital especially due to the amount of leverage required. This person can make profits very fast and the same way, he can make huge losses. A medium trader will take some more time and have the advantage of opportunistic technical situations. A trader here requires less capital because the amount of leverage required is little only to raise ones profits. This also has got limitations because it has fewer opportunities compared to the other two. The last level is the long term where an investor wants to hold the opportunity for several months. The risks here are small but it requires a huge capital to cover for the open opportunities. Among the three, medium –term works best more so for beginners because it requires less capital and the risks involved are not as many as those of the short term traders.
Money management and risk is a skill that every investor must have especially those dealing with delicate markets like the forex trading. It is important for a trade to know the market trends so that they can know when good opportunities to trade arise and take advantage of them. Look for all the possible ways to reduce the risks which include, increasing the number of indicators that one is using. The forex indicators are used as filters in this trade. More indicators in forex trade result in less opportunities but a more reliable trading ground and the reverse is true. If one wants to reduce the risks, then they should adopt more indicators provided various forex trading systems.
Forex market is an open opportunity and anyone can make profits. However, this is not a market where you will invest today and get returns immediately. It requires patience and a well laid down strategy. The medium term strategy is efficient and one can generate substantial returns. Investing in this market without knowledge can lead to one joining the huge list of casualties who have lost a lot of money in this market. Do good consultation and research and you will certainly be a beneficiary of this market.