Are you new to forex market trading and searching for some interesting facts and concepts? Then you are in the right way. Here we have listed some most important facts for you. Read it out.
Introduction to the forex market
As per the triennial report published by the BIS (Bank of International Settlements) in September 2019, the global forex market touched the height of $6.6 trillion trading volume in a day. It was the first time ever in the history of this market that it attained such a considerable height. This decentralised market continued to grow even more despite an ongoing global slowdown.
The surge in digital advancements and introduction to high-speed internet connection paved the way for many novices and experienced traders to start investing in the forex market. Both these events are the main reason for the widespread popularity of forex trading.
This market has a huge potential to generate massive profit for you. Forex trading also enables several businesses to buy or transact currencies in different countries. The numerous global currency investors work round the clock to set bids depending on the market price shifts. It is an ideal, largest and most liquid financial marketplace.
Also, with the arrival of strong regulatory oversight, online trading platforms, trading has become easier and safer for the market player than ever before. If you are planning to become part of this trendy market, then read all the points or concepts on forex trading mentioned below.
Forex market concepts for beginners
1) Stay prepared for losses at the initial stage
It takes some time to get familiar with the forex market charts and price movements. You may incur certain losses during your initial phase. Even experienced and successful forex traders face trade failures from time to time. You cannot just ignore losses; they are part and parcel of a forex trading journey.
The most important thing is not letting these losses and failure hinder your peace of mind. Use them to enhance knowledge and improve your training techniques. Additionally, also learn proper risk management techniques for each trade to mitigate losses and secure gains.
2) There are few currencies which traders trade largely
As per the data released by the United Nations, there were 180 currencies across the world till the year 2019. Despite this huge number for currencies, there are few which are largely traded in the forex market. The United States greenbacks or USD known as the world’s reserve currency makes up 89% of total forex transactions.
Apart from USD other major currencies include Japanese Yen (JPY), the Euro (EUR), Great British Pound (GBP), Swiss Franc (CHF), Australian Dollar (AUD) and the Canadian Dollar (CAD). The popularity of Chinese Renminbi or CNY has also increased in recent times.
These were some important currencies which usually large numbers of traders prefer because they are stable, belong to stronger economies and do not show huge variation.
3) Choice of an authentic financial service provider is important
A well regulated and legitimate financial service provider can make your trading journey satisfactory and safe. For long-term success in the forex market, the peace of mind is important while making a decision. If your mind will wander around questions such as Are my transactions and details safe? Am I on the right trading platform? Then it will become tough for you to harvest profit.
Different countries across the globe have their own central and financial regulatory authority which provides the licence to brokerage firms. These are financial watchdogs which track activities of brokers, to ensure that you trade safely without any risk and your funds remain protected. They keep licensed brokers bounded through the rigorous regulatory structure, while also being fully equipped to offer strong trade terminal, dedicated customer service and comprehensive education.
One of the authentic financial service providers is Global TradeATF. This brokerage firm is a trading brand of Bayline Global World Ltd and regulated by the legitimate International Financial Service Commission (IFSC). The broker offers trading on wide financial markets which includes currency, commodity, cryptocurrency, stock, indices and forex. The minimum charges to start trade is just $250 without any commission. The broker earns though swaps and spreads.
4) External events influence the currency rate
Numerous factors influence the exchange rate of the currency. To predict price shifts successfully the trader should keep close watch on political developments, macroeconomic factors, the announcement of the central bank, economic data such as trade tariffs, unemployment rate, manufacturing indices, GDP, and inflation data. Variations of currency prices can also arise due to political instability.
TradeATF is an excellent brokerage firm providing various research tools such as economic calendar and report season calendar. Both of these are an excel way to stay updated with the accurate and latest global financial news and political events.
5) Leverage is a double-edged sword
One of the interesting features of the forex market is trading on leverages. The trader can easily open large trading positions by spending a small amount. While this allows the trader to trade those securities which they cannot afford, it also increases the potential for both losses and profits. So, always try to select those leverage ratios which suit your long term goals and risk profile best. If not paid attention to they can wipe out your complete account if the financial market sifts against your predictions.
TradeATF provides excellent leverage on currency pairs which is 1:500. Visit the website of the broker to open a trading account. The process of opening an account is instant and requires just three simple steps.
6) Decide your trading techniques wisely
Try to choose simple techniques at the beginning of forex trading. The complex strategies can lead to stress trading decisions. Try to limit the use of numerous technical indicators in a single trade. Use those indicators with which you feel comfortable. Conflicting signals can lead to the loss of excellent trading opportunities or confusion.
7) Never stop learning
The forex market is continually emerging and hence to stay in the race, it is a good idea to enhance knowledge with the evolving market. Novice technical strategies, trading instruments and tools are arriving in the forex market at a fast pace. The only way to stay up-to-date on these instruments is to keep a learning mindset.
Consider using a virtual or demo trading account, a tested way for creating new strategies. You can gather data from several analysts, seasoned traders, knowledge portals, news agencies and investment specialists. There are numerous seminars and industry workshops held at regular intervals and attended by thousands of investors. These provide chances for networking, along with enhancing knowing.
8) Keep emotions at the side for long term success
Emotions should not guide your trading decisions; they must depend on analytical and statistical figures. Allowing emotions to overpower your trading position can lead to prematurely closing of positions or overtrading. While some investors attempt to recover the losses by opening random traders, others usually let winning trades run longer than required, in hope to harvest massive profits.
Emotions, such as revenge and greed, can prove destructive. Trading success generally lies in defined trading techniques and deep market analysis. There are many technical indicators which help investors to locate entry and exit points effectively. Some risk management tools and stop-loss orders are also useful in mitigating losses.
The Bottom Line
The forex market is an over-the-counter (OTC) or globally decentralised market for trading numerous currency pairs across the world. The market entirely runs on currency exchange rates. If you are planning to enter this globally famous trading arena, then gain knowledge and read each concept and factors which affect the market price. You can start with the demo trading account before jumping in the real market. It allows you to practice new strategies, keeps you away from sudden market shifts and allows you to implement risk management strategies to check their real strength.