I would like to start our discussion with currency trading, as we all have been part of this market, both as consumers and tourists.
Now picture this:
Before you set foot on a plane or that luxurious cruise ship to some dreamy exotic islands, perhaps you had some of your local currency exchanged for your destination’s currency.
At least, this is what I do!
Say that we are traveling to Thailand and, more specifically, to Phuket.
Sounds magical, doesn’t it?!
So, let’s go to the bank or the ATM and convert some of our local currency to Thai Baht, which is the currency of Thailand.
This can be useful in case our credit card runs out of money, so we have enough cash to spend and eat our favorite Thai dish.
I like green curry, by the way!
Now, this is what is known as foreign exchange—exchanging one currency for another.
Of course, nowadays, traders may take advantage of technology's advent and benefit from the currencies' fluctuations.
Let’s take a look at an example.
Say, that after analyzing the most popular currency pair, the EURUSD, I decide to buy 1 lot at 1.2000 and set a take profit at 1.2100.
Now, this may be done in the comfort of your home using your smartphone or on the metro or bus going to the office. All you need is basically a trading platform and a smartphone.
The foreign exchange market has several advantages.
● It is open 24 hours, 5 days a week.
So, no excuses for not having the time! This schedule around the clock can accommodate everyone.
Nowadays everybody is very busy and time has become the most precious commodity. Remember the motto “Time is money”? Well, today, this motto has become “Time is more than money.” Why?
Because if you lose money, then perhaps you can make some more and recover, but if you lose time, then, unfortunately, no one can bring it back.
So, Forex can accommodate all with their long, tight schedules.
● It is a global online market.
That simply means that you can access it from anywhere you are as long as there is an internet/Wi-Fi connection.
● It is very liquid.
Meaning that one can buy significant amounts at any time.
● Leverage
Leverage is a great advantage as it allows one to trade with more capital than they deposited.
This implies that more trading capital will generate more profits.
At the same time, remember that more capital will generate more losses as well.
So, once more, use leverage wisely.
● Forex is bidirectional.
This is good news.
If the market rallies, then you can buy to benefit from the rise.
On the other hand, if the market declines, then you sell or short, as it is also known to benefit from the fall.
● Last but not least, it is the practice accounts.
Most of the brokers provide demo accounts so beginners can practice and learn with virtual money until they feel confident enough to start trading and investing.
Stay tuned for more.