Not Making Enough Money? It’s Time Someone Told You about Online Forex Trading and Investing!
Ok, so you’re curious about the whole “online forex trading” thing and you’re looking to learn something interesting about forex trading and investing, right? Let’s roll!
Forex Trading (short for Foreign Exchange Trading) refers to the exchange or simultaneous buying and selling of foreign currencies by investors, speculators and traders in order to make a profit.
The ever increasing demand for global commerce and social intercourse has geared the geometrical growth of the currency markets from a couple hundred billion dollars a day to well about $4.5 Trillion/day currently speaking. As long as countries continue to interact and do business with each other, forex trading will be going nowhere!
The idea behind trading currencies isn’t really that complicated as many might have had you think, say for instance you were in the autos business selling new and used cars, you’ll be looking to buy the cars you intend to sell lower than the prices at which you’re going to sell them to make a profit right? Good!
But what if you had a way of knowing exactly which car was going to be in very high demand in the next couple of months or better yet couple weeks, after having done some nice research? You could just buy that car model now at a very cheap price since most people do not know what you know right (that that specific car model is going to be scarce in just a few days)?
When lots of people want something and there isn’t enough to go round prices start shooting up due to the ever increasing demand and under serving supply.
In trading this is no different, you get to define some certain criteria that’ll help you find a nice and cheap car whose demand you gather is likely to go up (a currency pair ripe for buying in the case of trading) probably because of some rumor, then you buy now at a bargain price and wait to cash your profits out the market on that given trade.
Unlike stocks though you can buy and also short currencies, there’s always a bull market in the forex you just need to know how to look.
Ability to Leverage Trading Capital
Most Currency trading brokers offer what is called leverage to their clients, how leverage works is it amplifies the purchasing power of your account balance (Margin) depending on the type of leverage you’re working your trading account with.
If it was said that a $1000 forex trading account operates on 1: 1000 leverage, this would simply mean that every $1 in that trading account has the power to purchase $1000 worth of currencies.
Since leverage amplifies the purchasing power of your trading capital, it could be used to make huge amounts of profits in a relatively short period of time but I must warn you though that Leverage is a double edged sword, just as it has an enormously high potential for profits, huge losses can be incurred when used unwisely.
Forex is a 24 Hour Seamless Global Market
Due to the variation in time zone for different geographical locations across the globe, 2 am in New York might just be 8 am in Nigeria and 7 am in London, if this was a regular weekday the usual course of activities for that morning would have people getting ready to go to their jobs.
Technological breakthrough such as the advent of the internet has greatly helped the globalization of business and ecommerce at the click of a button. The internet connects major financial centers across the globe and since morning in one part of the world is night in another, there’s always some financial center open to trade in, but be careful not all forex trading sessions present good trading opportunities.
Spreads are a Forex Trader’s Cost of Trading
You must have seen something like GBPUSD 1.5667/1.5670; this is the exchange rate of the British pound against the US Dollar at some point in time, it means that you’ll need $1.5670 to buy £1 where 1.5670 is the ask or buying price you buy the GBPUSD currency pair from your forex trading broker.
1.5667 is the bid price or selling price at which you sell the GBPUSD currency pair back to your forex broker. If you bought the GBPUSD at 1.5670 and immediately decided you wanted out you would have to sell it back to your broker at 1.5667 the difference of 0.0003 or 3 pips is the spread which is you broker’s commission on opening that particular trading position.
Unlike the stocks and futures market, there’s no commissions on trading the spread method is used this makes trading very the forex very cheap compared to other markets. If you want to learn the common terms associated with foreign exchange trading you can read this post, “Learn All the Forex Trading Terms to impress your Date this Friday”.
A Word on the Risk to Reward Potential on Investing in the Currency Markets Just like any other business trading currencies carry some certain amount of risk but unlike any other business currency trading promises huge profit potentials but only when done the right way.
When you consider the risks to the profit potential the forex promises and compare it other businesses you’ll see that the forex will make you much more money by far whether you decide to trade yourself or have someone manage a forex account for you as an investor.
Do not let naysayers deceive you with the chitty chat that the forex is too risky to even dare considering investing in, after all it’s your money you’re going to be trading with not theirs, right?
A strong line of advice if you’re looking to learn online forex currency trading, enroll yourself into an online forex trading school and get yourself the quality forex trading education you deserve, you’ll be well on your way to trading profitably when you dump the thought that some cheap automated trading software can trade and make money for you.
Forex trading is a very lucrative business opportunity which can be easy but only when you have the required know how, there’s absolutely no way around this people.
I hope you found the information in this post helpful, please pass it along to friends who might equally find it helpful; you don’t know they just might thank you for it!
Comments and Questions people, am all eyes and ears to hear your opinions and help with your questions, wishing you a smooth ride on your forex trading adventure.
Cheers…
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Anas Abba is an Active Forex Trader and Fund Manager at DigiTrix Fx Firms. His "Crack-the-markets-with-your-mind" Style of trading has helped 100+ of Aspiring Forex Traders all over the world achieve their dreams of Financial Freedom Through Currency Trading. Connect With Anas Abba (Forex Coach) on Google+ or Join His "Schooling Y'all on Forex" Community to get The Hottest Forex Trading Tips, Techniques and Strategies.
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