Finance

Forex Trading Basics

Forex is the biggest and most liquid market of the entire world today. Forex is the acronym for Foreign Exchange Market. One to 7 trillion dollars’ worth currency exchanges happen at forex every day. That’s a huge amount of money. No stock market exchange of any country come close to this. You need to sign up with best trading platform in India to deal in forex trading.

Let us check out some of the basic concepts of forex trading.

This market is huge. It is a sea of money full of sharks and dangerous waters, but it is also the only market where you at least hypothetically can make ₹1,000,000 in two weeks starting with only ₹1,000.

This looks tempting but it is not that easy, otherwise every stock trader would have started investing it in heavily. Forex trading is done to have diversification in your investment portfolio. Just remember that 95% of traders lose money, 5% make it and less than 1% become rich at Forex.

The good thing about forex market is that you can make money in quick time by unconventional means, you do not have to spend money on promoting any product or service, selling anything, nor advertising. You need deep pockets and will power to invest heavily depending on your knowledge, research and expertise.

This is the market where banks, big investors, multi corporations, transnational corporations and individual traders exchange one currency for another. You can trade at multiple leverages from 50 to 1 or as much as 400 to 1, meaning that for every rupee that you have for trading you can trade 400. For example, if you have ₹1,000 on your account you can trade as much as ₹400,000.

This leverage system is used voluntarily. You are free to skip it. The higher the leverage taken, more is the risk of losing money. Most experienced traders won’t use such a high leverage. On the contrary, high leverage can be good if you have experience to use it in your favour.

You see the problem when you are inside it. Trading Forex is indeed hard due to scarce success rate. Today you may be earning a lot and tomorrow you are losing 50% of your starting capital. Naive traders often commit same blunders again.

There is no shortcut in forex trading. You do not invest in forex, thinking your efficient working would save time. Here everything depends on the market and trading fluctuations of the day. It is not easy like stock market wherein you start trading just after demat account opening. There is not get-rich-shortcut even if you are an expert investor. There are many small companies who promote their products as get-rich system in forex trading. But the truth is there is no such trick in forex trading.

The emotions of fear and greed that mostly works in stock market is true here too. It looks so but forex market is the not ideal place to get-rich easily. You can make money after some months but still you have to spend lots of time in understanding this market. You must know what factors move the price of the currencies and how to invest in such fluctuating currency movements.

The secret is in your overall knowledge and your decision making process. This comes with experience and practice. Do lots of small forex trades. Many great stock broking companies offer free stock trading courses for investors. If you open an account with one of these online brokers you can trade on paper before you trade with real money, so you can learn and practice before you risk any capital.

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