The Basics of Forex Trading
Contrary to what you might think, Forex trading can be quite easy. With the right Forex broker on your side it can be a lucrative addition to any portfolio. Here are our tips on how to make Forex work for you.
Why do I need a trusted broker in order to trade Forex?
As we mentioned, Forex trading can be a safe and profitable experience- but only if you have a trustworthy broker. You will likely need them to access Forex, as you likely do not have the financial resources to simply enter the market yourself. This broker will be running your trading account and charging you fees for use of the platform.
Choosing a ‘fishy’ broker can be very risky as your investment is at stake. That being said, not every broker with a bad review is a scammer. Remember that many traders make poor decisions and end up losing money on Forex trades. It’s human nature to blame the broker instead of their own trading failings. You will need to use reputation and common sense to pick a trusted service provider. Examine all the evidence if you find a less than favorable review, and that should help you know if it’s sour grapes or fraudulent activity that is driving the conversation.
Signs of a broker you can trust include a long, reliable and traceable operational history, a service that’s clear about fees charged and an easy withdraw process. They’re prepared to listen to you and ask about your financial structure to get the full picture of what you want to achieve with your trading. Good Forex brokers admit to their strengths and weaknesses, and don’t try to claim demi-god status about having no flaws at all. Everyone has a weakness and a particular financial strength they prefer to work towards. They should also, of course, be registered, regulated and qualified to operate as a broker.
What is forex
Forex is the exchange of foreign currencies or foreign exchange. To help put things in perspective, imagine comparing a powerful country’s currency like the US dollar with the less valuable South African Rand. An exchange rate is then set between the two currencies. For example, let’s say that the current exchange rate between the two is 1 USD = 18 ZAR. So, by having just 1 US dollar, you could exchange it or sell it to buy 18 South African Rand.
After making the exchange, however, a trade war between the USA and Russia erupts causing the devaluation of the US currency to the point where you now need 2 USD to buy the 18 Rand.
Since you already have this amount of Rand, you can exchange it back and get 2 USD essentially doubling your initial investment of 1 USD.
Trading forex involves trying to predict an event or a pattern that will cause the appreciation or devaluation of one currency against another. Traders do this by buying or selling to profit from the difference. The key though is that forex is a speculative instrument and you don’t buy or exchange any currencies; you are just speculating on the exchange rate differentials.
Why trade forex?
Learning how to trade forex is easier than you think. Being the most liquid financial market, the profit opportunities are 24/5. You don’t need to change your entire lifestyle to trade forex; some forex traders open and close positions during the morning and others throughout the day. Forex trading offers the highest profit potential than any other market due to the volatility of world currencies. Every day political, economical, and environmental pressures are affecting countries. This means high volatility for many currencies.
Why choose CMtrading as your Forex broker?
There are a few good reasons to consider CMTrading as your Forex broker:
The key to a healthy Forex trading experience is finding the right Forex broker to ‘steer’ the financial ship you’re creating your account. A trusted and transparent service partner like CMTrading will guide you to grow your wealth and savings.