The economic ups and downs of the recent years lead to an unsafe job market that makes many members of the workforce look for side revenues. Moreover, employees of today prefer more flexibility and independence. Millenials are more active in the business field than the previous generation, but not many people have the time and money to start on their own, however, there are other options to start investing, like forex trading and stock trading.
Forex trading is a 24-hour, 5 day a week market that involves trading currencies against each other, with the help of a broker or a market maker. It starts daily in Wellington, NZ and moves around the globe as the work day begins in the following financial center. This gives participants the opportunity to buy and sell depending on the economical, political or social news.
With the evolution of Internet and digital technology, Forex trading has become attractive to private investors and multinational companies. If you want to get the basics of Forex market, you should at first learn the eight most important currencies:
- U.S. Dollar (USD)
- British Pound (GBP)
- Japanese Yen (JPY)
- European Euro (EUR)
- Swiss Franc (CHF)
- Canadian Dollar (CAD)
- Australian/New Zealand Dollar (AUD/NZD)
When you make a transaction, you are buying one currency and selling other, but remember to take into consideration the interest of the currency that you sell in comparison with the interest of the one you buy. What is more, pay attention to the spread, which is the difference between the purchasing price and the selling price of a currency. How you choose your broker is another key factor of success, you should search for reviews, recommendations and most of all, to check if he is registered.
Your broker should offer a trial of the trading platform you will use and also provide some financial data and economic research for you. The platform should contain real-time information, charts and analysis tools to help you keep updated.
You might be enthusiastic as a beginner but watch the leverage carefully. If you browse through the latest pound sterling news, you will understand why moderation is important.
For an effective trading mix technical and fundamental analysis to identify good entry and exit levels. Fundamental data includes retail sales and durable goods, while technical information involves pivot points and Elliot Waves.
Another good starting advice is to study the features of each kind of trading software and open a demo account until you learn the basics of the trade. After you follow these steps, you can start allocating capital in order to make a profit. Discovering the forex trade step by step will allow you develop a long-term strategy.
As a newcomer, it is wise to follow the trend, which is the general direction of a market. Using past data, your broker can help you to identify the trend and use it to your advantage.
All in all, trading foreign exchange on the currency market can be both a hobby and a source of income. When you set foot in Forex trading, remember you will have to be up-to-date with the international political and economic context at all times.
Michael Sanduso lives in Toronto, Canada. He is a freelance writer and editor, tech geek, and stay at home father.