If you are new to forex trading and want to know the ins and outs of forex trading, this blog is for you.
In this blog, you will learn about forex trading, how to start forex trading, and how it can help you safeguard your money in the long run.
Let us get started!
The basics…What is forex trading?
Forex trading is the conversion of one currency into any other currency to generate extra revenue. For instance, people usually deal in euros, dinars, and dollars. They buy these currencies, wait for these currencies to elevate in value, and then they resell the currencies at a profit. Forex trading is considered to be one of the most active trade markets in the world.
Interesting facts about forex trading:
Following are some of the most interesting facts about forex trading that you should know.
- Forex trading is not a new thing. It has a long history and dates back to the Talmudic times. It was found from the Talmudic Times that there were people during that era who used to exchange currencies while taking a handsome commission for providing their financial services.
- In forex trading, GBP and USD are known as the cable. This interesting name comes from the fact that satellites and fiber optics were not functional during the past decades. The London and New York Stock Exchanges were connected via a giant steel cable that ran under the Atlantic. Hence, the pair got this fun name.
- Also, in forex trading, the traders are categorized based on their risk-taking behavior. Some are called bulls who are highly optimistic and think that the market will go up and get more profits. On the other hand, there are bears who are pessimists and believe that the market will go down.
- The volume of trading in forex markets stands at more than $5 trillion a day, much more than the New York Stock Exchange volume.
- The dollar is the most dominant currency in forex trading and controls nearly 80% of all forex traders. Almost 90% of forex trading is speculative trading.
- Today, forex trading can be conducted by anyone across the globe. However, Forex trading was only possible for banks and financial institutions with at least $40 million to $60 million in liquid funds.
Steps to start forex trading:
For suitable forex trading, you need to follow the following steps.
For successful and risk-free forex trading, you need to have a good internet connection along with a suitable device. A poor internet connection can disrupt the whole process of trading within moments, especially when you are dealing with online brokers. To keep yourself safe from unwanted risks and losses, always try to have an excellent electronic device and a stable internet connection.
Find the perfect online forex broker:
According to Investopedia:
A forex broker is a financial services company that provides traders access to a platform for buying and selling foreign currencies. Transactions in the forex market are always between a pair of two different currencies. A forex broker may also be known as a retail forex broker or a currency trading broker.
You can connect to a forex broker easily, irrespective of your location and budget. You have to research the broker best suited to your needs, and you are good to go. At a minimum, the broker you choose should keep your money segregated from its own and operate in a well-regulated jurisdiction under the oversight of a reputable regulator.
Open your trading account:
After finalizing a broker, it is time to open your trading account. You can easily open an account by following easy steps online. Once you start your online trading account, it is time to deposit funds in the account.
There are multiple ways to transfer funds in your account, including bank wire transfers, debit card payments, or transfers from electronic payment providers like Skrill or PayPal.
Get a forex trading platform:
To start the trading process, you need to have access to an online forex trading platform. You can get one on your own, or you can ask your broker to get one for you.
In Pakistan, most online brokers offer a third-party trading site such as MetaTrader4 and 5 (MT4/5) from MetaQuotes.com or NinjaTrader.
Now you have all the things needed to start the trading. If you are a newbie, you might want to start with demos. Open a demo account funded by virtual money and try to learn and practice forex trading over there. Also, if you are keen to learn the strategies and risks associated with forex trading, you should use demo sites to practice forex trading.
Things you need to know about Forex Trading
Keep the following things in mind before putting your money into trading.
Select a currency pair:
First of all, you need to define a currency pair that you will use for trading. The primary aim of forex trading is to exchange the value of different currencies. When you start Forex trading, you buy one currency and sell the other one simultaneously. In short, forex trading is usually done in pairs where both currencies have to work at the same time to complete the buying and selling process.
If you are new to forex trading and want to stay away from risk and loss, you should start trading from the most common trading currencies in Pakistan. These currencies are the US dollar, euros, pounds, and dinars.
Understand the market:
When you invest in any business, it is crucial that you understand the ins and outs of the market and its dynamics. Before starting forex trading, make sure you know which currencies are actively traded in the global market, what factors change the value of currencies, and the best avenues to exchange the currencies in Pakistan.
For instance, one of the significant factors that affect the whole forex trading process is the country’s economic condition. If the government is in a financial crisis, its currency will suffer, and as a result, the forex traders will not be interested in that specific currency.
In short, research and sound background knowledge are needed for smooth forex trading. Try to read books, newspapers, magazines, listen to investment podcasts, and watch investment TV shows to grasp as much knowledge as you can. There are millions of sources on how to learn forex trading, how to make money on forex, and how to start forex.
Also, if you are new to trading, worry not. There are forex trading courses for beginners that will help you on topics like how to learn forex trading step by step, how to make money in forex fast, and how to make money trading forex.
Understand the process:
As we have mentioned above, forex trading consists of two currencies. In short, you work with currency pairs. When you deal in forex, you will come across two quotes.
The first quote signifies the currency you are about to sell. The second quote is for the currency you are about to purchase. The difference between the two currencies is the profit, also known as the spread in forex trading. Spread is the amount the dealer charges for making the trade.
So, these are some of the most important things you need to know about trading. With these crucial pieces of information, you will become a successful forex trader in Pakistan. In short, this forex trading guide will help you immensely.
Remember that forex trading is not rocket science. With sound knowledge and good strategies, you can make a promising career out of it. Give this blog a read, and let us know if you have any queries or suggestions regarding the topic.
Dropdown a comment in the comment section below, and we will get back to you as soon as possible.