To those of you who are completely new to the forex world or the financial market as a whole and are looking to do something about it, this is what you have been waiting for. This very day, at this moment in this time, is your salvation. Look no further. In this step-by-step forex trading course for beginners, you will learn everything you need to know about the forex market.
In this training course, you will learn about the forex market, it’s terminologies and the advantages of trading in forex.
What is forex trading?
Since this is a forex for beginners course, let try to understand what forex trading is first. The word trade implies buying and selling. The forex trading is simply the buying and selling of currency in a decentralized market. A decentralized market simply means that the market is not confined to one particular place. There are forex markets all over the world. Even though there are many currencies in the world, certain currencies are used more often than others on the forex market. Certain currencies are deemed major whilst others are deemed minor. The major currencies include USD, GBP, EUR, AUD, NZD, JPY, CAD, CHF and the minor ones are any other currencies other than these. They are called major because they are the most traded ones.
Many years ago, forex trading was restricted to institutional investors and individuals with substantial capitals as entry barriers were simply unfavorable for the majority of world’s population . Only the big players like huge banks and hedge funds could trade in the market. But that has changed now with the introduction of online retail forex brokerages. Retail brokers are the most known players on the forex market. There are other players on the market and these include huge banks, government and central banks and large commercial companies.
Brokers simply connect you to the forex market in order to trade but at a commission. There are two types of brokers. The market marker and the electronic commission network (ECN).
Why Learn to trade forex?
With the increase in complexity in this technological world, it begs the question, why do you want to be left behind? The forex market though has been in existence for ages, keeps growing with the increase in information and technology. Not being a part of the forex market not only leaves you behind in this technological world but also robs you of a great opportunity to make passive income on a daily basis. Traders all around the globe make bucket loads of money of the forex market on a daily basis and you can be a part of them and it all begins or ends with this moment. Learning to trade as a professional in the forex market is not an easy feat to attain.
Prepare yourself mentally, emotionally and financially before you begin your career in forex trading. Make sure you to trade with money you can afford to lose. As an amateur, the road will get rocky from the start and you wouldn’t want to use your life savings to start trading.Now that you are prepared to trade in the forex market, you need to set some goals to achieve. Without it, you might not make it. After you have set your goals, you will need a plan and a strategy to execute the goal.
How to begin Trading Forex
After all that has been said and done, it’s now time to dive into some basic principles you need to know before you begin trading.
- Firstly, the value of every currency listed in the spot market is determined by forces in the market. These are called floating currencies.
- The change in the value of floating currencies is a continuous process.
- The spot market is operational 24 hours, 5 days a week.
- Currencies are traded in pairs. This is because only by trading in pairs do we make a profit. The profit is the difference in the bid and ask prices.
- There are certain currencies whose values are fixed or are within a certain range. An example of such currency is (CNY) the Chinese Yuan.
- Lastly, you cannot trade directly on the forex market. You need an intermediate and in this case, the broker who will provide you with the trading platform once you open an account.
Factors like the central bank and the supply and demand are forces that influence the interest rate. The interest rate is one of the biggest factors that influence the value of a currency. The higher the interest rate on a currency of a country is the more foreign capital it will attract which will in turn, cause an increase in exchange rate.Currencies with higher exchange rates yield more profit.
Fixed vs Floating currencies
Fixed currencies are those whose values are fixed or set between a certain range. They are fixed by the government. It is impossible to make a profit from fixed currencies. Floating currencies on the other hand are currencies whose values are not fixed. They are currencies whose values are influenced by factors like supply and demand, interest rates etc. Their values are constantly changing. They serve as the profit-making currencies in the forex market. So all the money forex brokers make from trading are made on the floating currencies. So as a beginner, it is important that you know the difference between these two currency types as well as examples of them so as not to trade on a fixed currency out of ignorance.
Forex Trading Hours
The forex market works 24 hours in a day, 5 days in a week. This is due to the different time zones. So when the Market closes on one side of the world another begins. And there are periods where they overlap and this creates a huge market volatility. For example, in a situation where we the market in Tokyo opens followed by the London session which is followed by the New York session gives an almost continuous trading on the forex market.
In conclusion, to begin your journey you need to consider all these points carefully to get a better understanding of what the forex market is and how it works before proceeding.