Commonly known as FX, Forex is short for foreign exchange, a genre of trading where currencies are speculated upon and exchanged. Sounds offbeat? It isn't! There is much in common between Forex and stocks, just the asset traded differs. The most attractive part of the foreign exchange is the trading volume it houses - over $5 trillion! This makes currency trading one of the most lucrative fields in the market. Opportunities are in thousands and there's much to make trading currencies. Forex even has a leveraged environment, which essentially allows you to participate in large-volume trades without any hassle.
The Forex Market:
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| Everything about Forex Trading in India |
Unlike trading stocks in an exchange market, currencies are traded over-the-counter (OTC) through electronic means. This decentralized market is opening round-the-clock, making it one of the few markets that function throughout a day; this is because of the opening time and closing time. By the time one market closes, another open, making it an incredibly flexible market! Forex houses high levels of randomness and chaos, making it exciting and all the more risky.
A Leveraged Ecosystem:
What seems like a blessing on the outset is a huge risk in disguise. Forex brokers allow traders to avail leverages. This leeway allows you to invest nominal sums and hold positions of huge value. For example, with a leverage of 50:1 and $100, you can participate in a $5000 trade. Leverages are one of the riskiest parts in currency exchange. What traders don't realize is, it allows you to make increased profits and at the same time leads to increased losses!
Immaculate speculation is needed to trade currencies, especially on leverage. A currency's value can fluctuate at any instant due to several economic and market factors. Excellent research is the first requirement for succeeding in Forex trading. Several traders enter the markets without ample knowledge, and find themselves in tough spots after a few trades!
Starting Off in Forex:
The first step in Forex trading is to partner up with an established broker. Brokerage will play a huge role in determining the path of your online share trading career! These agencies are responsible for a number of things like providing trading platforms, assisting in strategizing, and facilitating a trade. It pays off to be wary of scammers in the market. Hiring a shady broker will result in you losing every dime of your investment capital! Pick an established and well-known broker, and ask for a demo account before you live-trade.
Demoing before live trading is very crucial in Forex exchange. The volatility, trading tools, and strategies are something that has to be experienced, not studied! Demo platforms allow traders to trade with virtual money without worrying about any risks, and at the same time, experience everything first-hand.
Risk and Loss Management in Forex Trading:
The importance of risk management in Forex trading can't be stressed enough. Trading on a leveraged platform increases potential profits and prospects of loss as well. When you have an investment of $100 and are participating in a leveraged trade of $4000, losing it will cause you to lose the investment and the borrowed sum.
To prevent this from happening, stop-losses must be implemented at all times. Forex is highly volatile and predicting falls in a currency's value isn't always possible. To defend against this element of randomness, traders have to keep some sort of protection mechanism in place - stop-losses! These orders are used to set a threshold of loss which you can incur without suffering, should that value be met, you will be withdrawn from the trade automatically! With this in place, you can keep your focus on the charts without worrying about losses.
Strategizing in Forex Trading:
Succeeding in currency trading requires meticulous planning and consistent research. Professional traders stress on the importance of a trading strategy time and again because without ample knowledge of the market and its underlying factors, winning a trade is impossible! A trading plan serves as a map of the vastness of the Forex exchange market; the better the plan, the higher the chances of getting out!
Similarly, currency pair knowledge is important too. A plethora of pairs exist in the foreign exchange market but not all are dominant. Currencies like USD, EUR, JPY, GBP etc., are predominantly on top of the charts. At the same time, these pairs won't necessarily fetch you good money. All currencies experience a fall at some point, so be diverse in your picks. This way, you will enjoy trading and not remain stuck exchanging the same 2-3 pairs over and over.
Winning Trades:
To be put simply, succeeding at Forex takes patience, research, and experience. Following this comes a strategy and a broker. When you're equipped with the best of these, success is just a matter of time. With the right brokerage agency assisting you, Forex will be enjoyable and profitable! Hire the best Forex broker - WesternFX. Dominate Forex trading in India with our unmatched brokerage!
