Chances are, most of you will have heard of forex. Also known as the foreign exchange market. Primarily, it’s trading foreign currencies much like you would trade stocks. However, it’s complicated and prone to fast changes. If you want to dip your toe into the world of forex, then it can be difficult to know where to start. We’ve put together the ultimate guide, to help you on your way.
Let’s kick off with a bit more information about the foreign exchange market. There’s no point trading in something you have absolutely no clue about. Back in 1971 an agreement was made that allowed currencies to be traded freely between countries. This meant that the values began to change quite rapidly. When most people think of foreign exchange, they think about visiting the Bureau de Change for their vacation money. This is technically trading currency, so isn’t it the same? Forex is different in the fact that the money isn’t being used for vacations or commerce. It’s being traded in a similar way to stock markets. Both individuals and companies can trade forex, to make a profit. Buying when the value is low and then selling when high. Just like with stocks.
How to Trade Forex
Now let’s get into the nitty gritty of foreign exchange. There are several routes you can go down, depending on how confident you feel in your abilities. Most people will use a broker service, like ACM Forex Trading. This company will take your investment and use it to trade forex. Usually, agents are well trained and have insider tips. They will attempt to make the most from your investment. However, most brokers will also take a fee or percentage. If you’re feeling a bit more confident, you can trade on the foreign exchange market yourself. This is only something you should consider if you’re adept in investments and trading. If you have lots of experience on the stock market, then you may well succeed in forex.
Doing it Yourself
Let’s go into a bit more detail, if you’re planning to go it alone. The concept is extremely straightforward. You’re effectively ‘betting’ on the future of a currency pair. To do this, you have to buy the exchange rate of a pair of currencies. For example, GBP and USD. If you think that the exchange rate is going to rise in the future, then you buy when it’s low. Just like with stocks, you sell when the price is high. Many people think forex trading is a scam because it all seems a bit complex. Many people have also tried their luck on the market and failed. The issue is, currency is one of the most difficult commodities to trade. Unless you’re clued up and have insider information, it can seem like you’re just throwing money away. That’s why a lot of investors turn to brokers to help them.
It’s a good idea to study up if you want to trade on the foreign exchange market alone. There are plenty of guides out there, to help you understand how it all works. Hopefully, this guide have given you a little bit of insight into the wonderful world of foreign exchange.