Thousands of people around the world earn a nice income trading currency in the foreign exchange market. The concept may not seem complicated at first, as buying low and selling high is easy to understand and is applicable across all types of investments such as stocks, bonds, and real estate. Yet, Forex is different. It is possible for you to make money even if you buy high or sell low. It also has terminology and strategies that can seem complicated at first. For instance, when you trade stocks, you buy stocks in one transaction and sell stocks in a separate transaction. With currency, you buy and sell in one transaction simultaneously.
You will need to learn about currency pairs, pips, interest rates, and leverage. You will also need to understand the macroeconomic and political conditions of the countries whose currency you are interested in. When it comes to Forex, there is a lot to learn. First, let’s look at what it is, then we’ll look at resources where you can learn how to trade currencies.
What is Forex?
Forex is a decentralized global market where banks, financial institutions, and individuals can trade currencies. It has an average daily volume of $5 trillion, which makes it the largest active market in the world. You can be active in the market 24-hours a day, five days a week through a network of computers over different time zones around the world.
Learning How to Trade Currencies
You will quickly learn that you do not invest in currencies. Currencies are meant to be on a short-term basis because the smallest incremental movement in the price of a currency pair can mean significant gains or losses in your account. Your goal is to have more money in your account at the end of the week than you had at the beginning of the week. The best way to accomplish this is to educate yourself on how to be a successful trader.
Books are Still Key
This may not be the best way to learn how to trade currencies, but a Forex book will introduce you to the lingo within Forex. You will learn terms like cross rate, exchange rate, leverage, pips, margin, and bid/ask spread. Currencies are always in pairs. You will also learn about the best currency pairs like the U.S. dollar and British pound or the U.S. dollar and the Euro.
Online Remains a Strong Resource
The best way to learn is to still go online. The educational resources you can find online is virtually unlimited. One resource you can look at is the broker easyMarkets. It offers you a variety of tools that will help you become successful. Before you open a live account, it is best that you open a demo account. This will allow you to perform without the risk of losing any of your money. Think of this as an online poker game where you can learn the intricacies of the game without the risk. This way you can learn how to use different strategies to see what works best for you.