The Forex market is a lucrative source of income for many Forex traders. In addition, learning how to trade Forex can be an exciting and eye-opening endeavor for many about the potential of the Forex trading market. To put it in perspective, the global Forex market trades approximately $ 4 trillion a day. It is an easy and simple process to learn how to manage the business and then make profits or money from the venture. And as the popular cliché “you have to use money to make money” says. Forex trading is basically currency trading. So to get started, you need to invest a little capital in the venture. Forex trading is a speculative activity in which, as a trader, you speculate that the value of the money (currency) you have purchased will increase compared to the base currency.
Before embarking on Forex trading, it is vital to get acquainted with the basic Forex terms. The base currency is the currency you sell, while the quote currency is the currency you buy. For example, in a currency quote or list of EUR / USD, the euro is the main currency, while the dollar is the quoted currency. Then there is the bid price, which is the optimal price to sell your currency. This is also the price at which Forex trading brokers are willing to buy the base currency for the currency of the quote. The request price, on the other hand, is the optimal price at which you are willing to buy currency. Or this is the best price at which the broker is willing to sell the base currency for the currency of the quote.
The base currency is assumed to be 1 unit in the currency quotes. The investor can make money in Forex trading either by increasing the value of the quoted currency or reducing the value of the base currency. For example, if the euro / US dollar quote increases from $ 1.1451 to 1.1461 per lot of $ 100,000, the investor will make $ 100,000 (1.1460-1.1450).
Following these basics, the trader will open an online account for a Forex broker. There are many brokerage firms in the industry to choose from. It is recommended that you use a practice account before going live. Almost all Forex accounts have a practical or demo account. The demo account will help you get to know the different aspects of Forex trading. Then, as Forex trading relies on currencies, first research the market. For example, analyze the political environment of currencies. Also, start small.