So you want to become a Forex Trader?
What is Forex? the basics explained.
Essentially, the Forex exchange is where big banks, corporations, governments, t, and investors go to trade and “bet” on currency pairs. The Forex exchange is also called the ‘Fx market’, ‘foreign currency market’, ‘currency market’ or ‘Forex market’, and its the biggest and the most liquid exchange in the world with daily turnover of about $4 trillion.
Forex is open 24/5 with the major trading hubs being located in Zurich,
New York, Hong Kong, London, Frankfurt, Paris, Sydney, Tokyo, and Singapore.
A short history of Forex in a summary: In 1876, we had the gold exchange standard. A rule stating all paper money had to be backed by gold; the concept was to stabilize global currency by pegging them to golds price. in theory, it was a good idea, but in practice, it created patterns that ultimately killed the gold standard.
The gold standard was ended near the start of World War 2 as European countries didn’t have enough gold to back all the money they were printing to fund military projects. Although the gold standard was discontinued, the metal never lost its place as the greatest form of financial value.
The ‘Bretton Woods System’ was when the USD was the only currency backed by gold circa 1944 until its end in1971 when the U.S. said it would no longer give gold for U.S. money held in foreign banks.
In 1976, the end of the Bretton Woods System led to a global acceptance of floating foreign exchange rates, which was the birth of our current foreign currency exchange market, which didn’t become electronically traded until the 1990s.
What is Forex Trading?
Forex trading as it concerns retail traders is speculation on a price of one currency versus another currency. For instance, if you think the USD will go up versus the Euro, you’d buy the USD/EUR pair and hopefully sell at a profit. If you buy the USD against the Euro (EURUSD), and the Euro strengthens, you would lose money. A good broker such as trade111 or trade fx asia could be of big help.
Trading Forex requires several things:
Discipline – to stay calm and collected in a state of constant stress (the market)
Focus – to remain focused on the trading plan and stay on course
Patience – waiting for the highest-probability strategies to be possible to trade
Confidence – to believe you and your strategy is good enough to win
Dedication – to become the absolute best trader possible
Self-control – to not make overly risky trades and blow out your account
Logic – to have a straightforward and level-headed approach to looking at the market
Savvy – to be able to know what the market is doing and being able to employ your trading strategy at the best time
Flexibility – to trade a volatile market with success
Realism – to understand trading and the realities of the market. This isn’t a get rich quick scheme.
Organization – to build positive trading habits and stick to them.
Ability – to not have emotional breakdowns when you lose a trade (or 19).
While the forex exchange is definitely a great way to trade, it is important to note that trading, especially for newbies, offers both the possibility for reward and risk. Lots of traders get into the market only thinking of the rewards while ignoring risks. That is the quickest way to flush all your money down the proverbial toilet. Anyone who wishes to get started in trading Forex on the right path should be aware of the fact that any trade you take has the potential for a loss.