Whilst it is true one can make fortune by trading the stock market, Forex trading is one aspect that could earn you more, either slowly and steadily or in a very rapid way, all depending on you.
As the name suggests, FOREX trading is an acronym for Foreign Exchange market. Here, currency traders buy and sell currencies of different countries in order to make a profit by predicting fluctuations in exchange rates.
Just like in the day to bay business of buying and selling, you either bring what to sell and someone buys from you and pays you, or you go to buy what someone is selling and pay for it, it all involves the exchange of commodities; a fiat currency for a physical asset.
It is the same as trading the Forex, but it involves buying a currency with another currency, or selling a currency to another currency, at least that is what forex trading is all about. You would be marveled at how much wealth you can amass from trading forex.
Just like every other thing you do, learning comes first.
Take, for instance, Raphael Nadal and Roger Federer iconic and prolific tennis stars. They have had years of constant and continuing practice before they become what they are today in the world of Tennis. Albeit they still lose games not because they are not good again, but because they are still learning and it is indicative that there is much to learn and adjust while you climb your way up in whatsoever field or career you find yourself.
The same is true for a Forex trader, he or she must master first the art of trading, then continually practice to be able to stay up to the dynamics and volatility of the Forex market.
There are so many things one must put into place before delving into selling currency for currency or buying currency with currency. Some include gathering knowledge and constant practices for experience and skills development.
In this article, I would divide what one must need to know before trading the forex into two major aspects; psychological and financial knowledge.
The Financial knowledge
Financial knowledge is the knowledge that one gets as a result of learning to manage and diversify their money and assets on the stock market for optimal maximization of gains while reducing risks and or loss.
This class or division would see subclasses such as;
● Brokers and the best to choose from
● Learning the financial market, and lastly
● How to trade.
Learning about the financial market
The financial market is the name usually given to either the stock or forex markets. It involves trading (the buying and selling of stocks, futures contracts, etc.).
In the forex market, just like every other type of market, what happens there is majorly buying and selling.
You would need to learn the market to acquaint yourself with the market environments and the factors that affect the buying and selling of currencies for you to make effective and adequate decisions on your trading and eventually become successful in your venture.
One way to do this is by taking forex trading courses where you can learn more about the market and options you can indulge in to make a future for yourself out of your little money.
How to trade
There is no really one particular path to follow or a major way one could say is a surety to success when it comes to how one could trade the forex. There are many different books, mostly based on philosophies and tried-out practices as to which way one could best successfully trade the forex, there is also a little blog post of 1000 to 1500 writing shortly on how to trade forex. However, books on how to trade the forex should have the same focus and theme, and most importantly, have an easy approach to trading the forex for someone with little to no knowledge of forex trading.
Below are examples of the top ten books on how to trade the forex include;
1. Technical Analysis of the Financial Markets by John J.
2. Trading in the Zone by Mark Douglas.
3. The Alchemy of Finance by George Soros.
4. Market Wizards by Jack D.
5. Day Trading and Swing Trading the Currency Market by Kathy Lien.
6. The Black Swan by Nicholas Taleb.
7. Bollinger on Bollinger Bands by John Bollinger
8. Japanese Candlestick Charting Techniques by Steve Nison
9. Trend Following by Michael Covel
10. America’s Bank by Roger Lowenstein
Let us say or assume you have religiously followed this article from the beginning and you are trying every of your possible best to ensure you make something out of this article by at least reading 5 of the 10 books listed here, then one can say for sure you have started on a good foot. But that is not enough, what is knowledge without practice? You need to put what you have read and learned into practice. How do you do this? one way is by opening a demo account with a broker and practicing for the first time and time and time again before moving on to opening a real account where you can now trade with real currencies, but now in a digital form. You need a broker.
Broker and the best to choose from
A broker is a middleman between a client and the exchange market or stock market. Forex brokers work in the same manner. They provide a platform or marketplace where individuals can buy and sell currencies.
When planning to start trading forex, it is imminent that you learn about brokers and what options they offer in terms of services and also fees charged per trade, and the required minimum balance to open an account.
A good broker should have at least the following ;
● A 24/7 customer support
● Low to no charge on trade executed
● A low to zero balance is required to open an account.
Below are suggested brokers you could find their services okay for your trading dream;
1. TD Ameritrade
2. Interactive Brokers
The Psychological knowledge
When it comes to trading, no matter the number of practice and experience you can have under your belt and the wealth of financial knowledge you can boast of, a wrong approach or mentality towards trading will jeopardize every of your effort. you must have a strategy to follow.
Depending on the type of trade you want to enter, either short or long trade, the best that suit you, you need to develop strategies and must know when to apply each one in different cases.
Forex trading strategies would help you navigate through, even amidst the uncertainties that surround the forex market.
This article is geared toward creating awareness of what you should know before venturing into trading the forex. It would be to your advantage if you took the advice or approach presented in this article and go on further researching them to fully grasp the scope of trading the forex.