Foreign exchange trading, also called forex, is the world’s largest financial market. With a volume of over 15 trillion a day, it’s more than three times as much as the world’s total stock and futures trading, so currency trading is like you can see a vast market.
What is being traded in the currency market?
The simple answer is money. Currency trading is, at the same time, buying a currency and selling another currency. Forex trading passes through a broker, and you trade in pairs, such as the euro and the US dollar (EUR / USD) or the British pound and the Japanese yen (GBP / JPY).
For example, you buy English pounds, you buy a stock in the English economy, as the price of the currency is a reflection of what the market thinks of the current and future state of the English economy.
Unlike other financial markets such as the Copenhagen Stock Exchange, the foreign exchange market does not have a fixed address, nor does there exist a central stock exchange that handles all foreign exchange transactions. The market consists of a network of banks all over the world, and it runs electronically 24 hours a day.
Until the late 1990s, only the “big players” could trade on the foreign exchange market. Initially, it was a requirement to have over 50 million dollars to trade with; the currency forex market was originally intended to be only for banks and other big players such as pension companies, and not us “small fish.” But with the spread of the Internet, online brokers now have the opportunity to offer ordinary people a chance to trade, without having to own 50 million KR.
What do I need to get started on currency trading?
A computer with internet access and an account with an online broker
What currency can you trade?
One can trade real many different currencies, some of the most popular ones.
JPY Japanese Yen
GBP British pound
CHF Swiss franc
CAD Canadian dollar
AUD Australian dollar
NZD New Zealand dollar
A currency code always consists of 3 letters where the two first identify the country, and the last letter recognize the name of the currency, for example, JPY JP stands for Japan and Y stands for the yen.
Forex strategy for beginners
Remember that forex is severe and you can easily lose your deposit, especially if you are not thinking about it. In the following, we will come down with some forex tips on how to avoid making the big classic bugs that cost you too much money and that you could have avoided. These are not the big chrome tips, but the good rules of memory that increase your chances of a successful meeting with forex trading.
Put yourself in the right place
If you bother to put yourself in a good position before investing your money, there is also a higher chance that you will have an excellent and lucrative forex strategy experience. There are many good sources of knowledge about currencies and which ones are suitable investments in, for example, Børsen, Erhvervsbladet, and Business.dk often bring interviews with currency experts in the big banks that give their – usually useful – tips for which currencies as are on the way and which are going down in value.
Specialize in Few Currency Pairs
Another good piece of advice that can help you to good currency trades is to specialize in some currencies. Often it may be worthwhile to follow individual currency pairs and gain knowledge about this particular pair or these currency pairs. In this way, you also have extensive experience about which factors influence the relationship between the different currency pairs.
The pursuit of the big win means high risk
Forex is a high-risk field, and there is no safe path to steady gains. The Internet is full of pages that promise you secure benefits if you follow their advice – this is very uncertain. There is no secure Forex online strategy, and it can cost you a lot of money to blindly follow some self-appointed expert’s advice. It is sensible enough to familiarize yourself with the various currency trading strategies that are also to be found on this page, but we are aware of no bulletproof strategy.
Good advice is that the higher the risk, the greater the gain. Many are trading at high leverage, which can mean a significant benefit, but this also increases the risk of losing money significantly. As a beginner, we recommend you not to use too much leverage.
Advantage of forex bonuses in the beginning Finally, you have the opportunity to extend your money further through some of the many good forex start bonuses online. Sites like the excellent forex platform Etoro forex offer great start-up bonuses that can help make it more fun and maybe even more profitable to invest in currency.