The foreign exchange market is the world’s largest trading market, far higher than the daily trading volume of stock markets in various countries reached more than $5 trillion, compared with the New York Stock Exchange (NYSE) trading volume of $22.4 billion a day is a bit insignificant, but the foreign exchange market retail traders trading about $300 billion to $400 billion a day
- Introduction to Forex trading
- How to invest in Forex
- Who is suitable for for forex to invest/trade?
- Major currency pairs Forex pair (maximum trading opportunities)
- The pros and cons of Forex trading
- A common problem for novice Forex traders
Introduction to Forex trading
In Forex trading, when you buy a currency, such as GBPUSD, you are actually buying “shares in the UK economy”. When you buy pounds, you are on the right side of the UK economy and will be better off in the future. When you resell “shares in the UK economy” to the market, you get a profit (spread)
Generally speaking, the exchange rate of one currency to another is a reflection of the economic situation of the two countries.
If you’ve ever traveled abroad, be sure to exchange your currency at the airport’s currency exchange point and convert your wallet’s currency into the currency of the country you’re traveling to. Then you must have “played Forex”.
|Total position lots||Leverage x1||Leverage x2||Leverage x5||Leverage x10||Leverage x50||Leverage x100||Leverage x200||Leverage x400|
For example, if you use 100 times the leverage in the Forex market, buying a trading position of $1000 is equivalent to $100,000, and the profit you can get is greatly increased
How to invest in Forex
▶ prepare information for opening an account
how ▶ open an account
- Select the trading platform
▶Forex & Stock Broker Platforms Reviews Recommened◀
- Upload the file material
- Deposit via the bank Visa/Master card
- Waiting for approval
- Once you’ve completed your review, you can start trading stocks
Who is suitable for for forex to invest/trade?
In the Forex Forex market, although commercial and financial transactions are part of the total volume of transactions, most traders are speculative, in other words, most of the transactions come from traders who trade according to intraday price movements, speculators bring in more than 90 percent of the total volume of trading and trades for real purposes account for only less than 10% transactions that are actually used for practical purposes of the actual transactions, known as a highly specialized and speculative trade in foreign exchange, trading people are never optimistic about the development of an economy or for some idea, they are purely trading price fluctuations to obtain profits.
Major currency pairs Forex pair (maximum trading opportunities)
Is also the largest number of retail and institutional legal persons gathered to trade the currency, your trading relative to the large market, gold (easy to be washed by institutions), the foreign exchange market volatility, the more opponents, trading volume is huge so that a single institution or individual affect the entire market price, relative to the stock he has a complete technical analysis, but the trend or shock launch, the sustained aging is usually more durable than the stock market, you will have more short-term trading opportunities.
- USDTWD Buy Order = Buy USD = Sell Taiwan Dollars = Short Taiwan Dollars
- GBPUSD Buy Order = Buys Pounds = Sells USD = Long British Pounds
- EURUSD Buy Order = Buy EUR = Sell USD = Long Euro
- AUDUSD Buy Order – Buy AUD – Sell USD – Long Australian Dollars
- NZDUSD Buy Order = Buy NZD = Sell USD = Long New Zealand Dollar
- USDJPY Buy Order = Buy USD = Sell Japanese yuan = Short Japanese yuan
- USDCHF Buy Order = Buy USD =Sell Schweizer Franken = Short Schweizer Franken
- USDCAD Buy Order = Buy USD = Sell Canadian dollars = Short Canadian dollars
The pros and cons of Forex trading
- Investment capital principal is less, short-term rate of return is higher You can use high leverage to enter and exit in time with small strokes, instead of requiring long-term progressive investment like stocks. In the foreign exchange market, you only need to analyze the economic situation of various countries, and pre-judge the market before the trend is formed and wait for it to be announced. Time to sell.
- 24-hour trading Since the foreign exchange market is open for trading all year round except for weekends and holidays and certain national holidays
- Fewer human interference factors Since the traders who can influence the trend in the market are usually large institutions and national banks, it is predicted that these few people can also make profits.
- It is easy to over-magnify leverage and lead to losses Since the daily volatility of foreign exchange is between 1% and above, it is extremely rare that there will be volatility higher than 2%. Therefore, most traders have adopted high-leverage trading methods and have achieved relatively visible profits. Therefore, the same is also true. The same loss situation will occur, and trading discipline must be strictly enforced.
- Short-term investment The foreign exchange market is based on the economic activity of national strength between countries to earn price differences, and therefore there is no long-term holding value.
- Sudden Black Swan Incident A small number of international events will greatly affect the foreign exchange market, especially when the position of the position is too high on weekends, it may cause catastrophic losses.
Less capital investment and higher short-term returns
You can use higher leverage in time to get in and out with a small fight, rather than needing long-term progressive investments like stocks, just by analyzing the economic situation in various countries in the foreign exchange market and prejudging the market before the trend is formed and waiting for the timing of the announcement to sell.
Trade 24 hours a day
As the Forex market is open for all but weekend holidays and certain National Day holidays, it is open for trading throughout the year
There are fewer human interference factors
Since traders in the market who can influence movements are usually large institutions and national banks, it is also predicted that these few will also be able to make a profit
It is easy to over-amplify leverage to result in losses
Since daily volatility of foreign exchange between 1% or so is extremely rare to fluctuate above 2%, most traders have made relatively visible gains by using highly leveraged trading methods, and therefore the same losses will occur and trading discipline must be strictly enforced.
It is a short-term investment
The foreign exchange market earns spreads through the prolongation of economic activities of national power between countries, and therefore has no long-held value
Sudden Black Swan incident
A small number of international events can have a significant impact on the foreign exchange market, especially if the leverage is too high at the weekend
A common problem for novice Forex traders
- Use excessive leverage
- Trading hours are not clear
- Overnight fee retention issues
- Use an investment APP with an unknown company or unregulation