A Forex Trader’s Guide To Making Money

A Forex Trader's Guide To Making Money

Forex trading is all about trading one currency to another. This exchange of cash flows through the economic market which opens up possibilities of inflation or deflation. In fact, you are essentially making that ATM currency exchange into a game or sport. All of this is done on the foreign exchange market, otherwise known as “FX”.

It is highly recommended that you should start with low-cost index funds for long term goals. If you do your research right those index funds could help fund your retirement. Provided that you know what you are doing, forex trading can be incredibly lucrative. Above all, this does require a limited initial investment.

TVI - Trade Volume Index: What You Need To Know?
TVI – Trade Volume Index: What You Need To Know?

How Does Trading Actually Work?

First and foremost, you must understand that foreign exchange trading is different from stock trading. You can differentiate between the two simply by what you are investing in. Stock trading focuses on companies. While forex trading’s focal point is about currencies. Although they are both in the business of trading, they are widely different.

TVI - Trade Volume Index: What You Need To Know?
TVI – Trade Volume Index: What You Need To Know?

With that out of the way, we can now talk about how trading actually works. There are a few key things to take note of when it comes to trading.

– Forex Trades are made over the counter. Whether they are done through brokers, dealers or trader to trader.
– The market is open for 24 hours a day, five days a week. All trades work across all timezones.
– Currency prices can change and fluctuate swiftly. Which in turn, makes it harder for investors to earn cash flow on small increments.
– Currencies are always traded and quoted as pairs. (Buying one currency, selling the other).
– It is important to have leverage.

Utilizing Leverage

Leverage is the ratio of a trader’s available funds to the size of the credit available for the broker. And you leverage is simply a means for borrowed capital. Most of the leverage used in forex however can exceed the initial deposit.

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