With the development of technological progress, many people found it convenient to make money remotely by working at home in front of their personal computer. Today you can start earning even without special knowledge or big money capital.
The popular Forex exchange provides anyone who wants to start trading with just a few dollars in their personal account.
Forex: what and how it works
Different world organizations constantly need to change the currency for international operations. In this they are helped by the Forex market, which is rightfully the largest of the existing world markets. On its sites, more money is exchanged daily than on the markets of the whole world combined. Forex daily turnover of more than five trillion US dollars.
The name of the Forex exchange comes from the expression "forex exchange", which means "foreign exchange". Money is traded on this site at free quotes. The price of the world currency is constantly changing, and traders timely sell and buy it. This whole process is the Forex market.
Forex trading takes place only in online mode, since this market is completely virtual.
Forex Appearance
Forex appeared as an international platform in 1971, and has been expanding rapidly since then. In 1977, daily transactions at the amount of 5,000,000 US dollars were made at Forex. According to experts, in 2020 the market will gain a daily turnover of 10 trillion.
Traders from all over the world today participate in Forex trading, their number is constantly growing.
Forex Members
The main participants are, of course, banks. It was created at one time precisely for interbank trade. Over time, the list of participants has changed and now they include:
- central and commercial banks;
- investment companies;
- traders
- Insurance companies;
- pension funds;
- international companies involved in import and export;
- dealers and brokers.
All participants can participate in the Forex market actively or passively.
Active participants are those who influence pricing. These are banks and brokers.
Passive participants - those who conclude deals at the prices offered by active participants. These are investment funds, companies related to import and export, as well as private investors who work through dealing centers.
Forex Market Relations
Since Forex works continuously, everyone can join its work at any time of the day or night. On this site, market trade relations are regulated, both between large companies and between states. This happens precisely due to the trading participants.
Understanding the principles of Forex is not difficult. However, in order to understand all the nuances and versatility of this trading system, to learn how to fully use the financial instruments of the site, it will take years. The guarantee of successful Forex earnings is only a clear and clear understanding of all the processes taking place on the site.
Difference between Forex and Stock Exchange
Many people know what stock trading means and what the stock exchange is like. Cryptocurrency trading is somewhat different from buying / selling shares, but not everyone understands what Forex is.
Stocks on the stock exchange are constantly monitored. On Forex, they mostly trade the most popular currencies. You can, of course, deal with rare, more exotic currencies. But the largest bets are placed on the world's leading currencies. These are Euro, Dollar (USD), British Pound (GBP), Japanese Yen (JPY), Australian Dollar (AUD), New Zealand (NZD) and Canadian Dollar (CAD), Swiss Franc (CHD).
Unlike Forex, on a stock exchange you can conduct transactions at a certain time only on a specific exchange (such as Nyse), and the most inconvenient - only within a few hours a day. You can trade Forex currency in real time around the clock. At the same time, there is no need to even think about on which exchange each lot is traded - the Forex system itself selects the most profitable sites and in this sense, trading in this market is very convenient and comfortable.
Since Forex uses loans when concluding trade transactions, having invested even a small amount, for example $ 100, a trader can count on the purchase of specific currency pairs in an amount up to 2000 units. This is the principle of margin trading.
In practice, this is expressed by the fact that if the price of the selected pair changes by only 0.0001, the result can be a very substantial profit from the investments made. At the same time, the purchase / sale is very fast, and the volumes are incredibly large.
Forex Exchange receives its commission from all transactions. It makes up the difference between sales and purchase prices. Naturally, the purchase price is always at least slightly higher.
Thus, the Forex exchange does not own physical shares or other documents accompanying currency trading. The system maintains the buy / sell status of each trader and receives a reward for this.
Unlike the stock market, Forex is not managed by participants.
The main advantages of the exchange
- The Forex market has high volatility, which is convenient and gives everyone the opportunity to earn.
- No specific skills are required to start earning. You can always try your hand at a free demo account, go through online or real exchange trading courses.
- Forex Exchange is not dependent on crisis situations in the world. Moreover, even in such a situation, when one currency grows, and the value of another falls. Forex works with currencies, and since they cannot decrease in price to a minimum, you can earn money on the exchange regardless of global economic conditions.
How to start working on the stock exchange
When you first get acquainted with Forex, many questions arise about what Forex is, how to make money on it and not lose your money. How to minimize the risk of loss of balance? This is the main issue of trading on any exchange. In this regard, the main recommendation is not to start trading for real money right away, but to first practice on a demo account and study exchange training courses.
When you understand the work of the trading platform and develop your own strategy - you can proceed to trading on a live account. Naturally, in order to successfully trade, you should know the basic terms, the history of the development and emergence of the foreign exchange market, understand the principles of analysis and learn how to use trading tools. A significant role in understanding the trading situation is played by Forex forecasts that are held by brokers and experienced traders.
Training courses are taught not only by newcomers to exchange trading, but also professionals periodically turn to them to improve their skills and to keep up with trading trends. High-quality courses are provided for its users by Alpari and Insta-Forex brokerage companies. Typically, such courses are divided into levels and are designed for traders with different knowledge and experience.
A way to earn income without personally working in the market
On Forex, even this is possible. It is not at all necessary to trade yourself if you are not self-confident. The Forex exchange gives you the opportunity to invest your money in the accounts of other users of the exchange who have proven themselves as experienced traders. For them, trading is not a hobby, but a profession.
Such an investment is also good because this service is completely transparent. Every day, those who have invested in the accounts of other traders receive reports on the trading of the account manager. In addition, it is possible to withdraw your money at any time.
Forex Basics for Beginners
Forex is one of the pillars of the movement of financial investments between states in world trade. With his participation, the international process of buying / selling (exchanging) currencies is much simpler, and this mainly attracts large banks. Various companies constantly pay import to other countries with the currency of these states. For such an operation, it is required to convert (convert) the national currency to the required one.
Individuals working at Forex at their own risk and risk only with their own money can only participate in transactions made by large participants. However, their personal contribution is not so significant. That is, the market provides an opportunity for those who understand what Forex is to trade currency at the price that is currently the most profitable.
When a private trader sells a currency, such as an American dollar, then it will be exchanged for another, such as the Japanese yen. The components of this procedure are called "pair". So, GBPJPY is a pair in which British pounds are traded in exchange for Japanese yen. Since Forex uses credit instruments, with this trade a trader sells or buys this pair at a price equivalent to 1.5000 per GBPJPY (pair).
That is, the similarity of Forex with the stock exchange is that there is trading in shares, and here in pairs.
How to make money trading Forex
To start making money on Forex, you will need to create an account with one of the forex brokers and replenish your account. Usually, most brokerage companies provide the right to deposit funds into trading accounts through many popular electronic payment systems (PayPal, Yandex Money, WebMoney), by credit card or by bank transfer. If none of these methods is suitable, then you can replenish your account through exchange offices on the Internet, indicating on the service website where to withdraw the money and wallet number of your trading account received from the broker. Thus, the money will be immediately transferred to the account for trading.
No matter how simple the replenishment of the account is, it is recommended that you first trade on demo accounts in order to understand the principles of the market, learn how to place orders and monitor the trend using Forex rate charts. After all, one seemingly insignificant mistake is enough to lose all your money in a matter of seconds.
Forex Concepts and Tools
- The base currency is the currency in which the trader is interested, and he usually trades with it. For example, in the pair USDEUR - USD is the base, and EUR is the quote ("counter-currency") currency.
- Leverage (or leverage) is a loan from a broker, thanks to which you can trade funds that exceed the balance by hundreds of times. For example, having only $ 100, you can buy 10,000 EURUSD, using the necessary leverage.
- Indicators are special tools with which technical analysis is carried out. Forex indicators are: trend, oscillators and auxiliary.
- Lot - the so-called unit of trade. Distinguish: Standard lot of 1,000,000 points; Mini lot of 10,000 points; Micro lots at 1000 pips.
- Open positions are orders that are not yet closed.
- Point or Pip (mark) - the minimum price applicable to the quote of a currency pair. Most currencies have a pip equal to 0.0001.
- Selling price (bid) - the price at which a pair can be sold.
- Short position - a parameter meaning that the order is placed in the hope that the price of the currency pair will fall.
- Margin is the difference between the sale price and the purchase price.
- Stop-loss is an undesirable price in its direction, upon reaching which the order will be automatically closed to avoid further losses.
- Spread is one of the important concepts. This is the measured in points difference between the sale and purchase price of a pair over a period of time. Spreads are fixed - constant; fixed with the possibility of expansion - under certain conditions it can expand; floating - a variable value depending on the state of the market.
- SWAP is the transition of an open trading position to the next trading day (day). It can be both positive and negative. There are trading accounts that are not charged with swaps. Sometimes there are days on which trading companies set up triple swaps. This needs to be known in advance on the broker's websites with which the trader works. Understanding the meaning of SWAPs, you can trade using the so-called SWAP Forex strategies. With this trade, orders are opened and kept open for days, months, and even years. Of course, for this you should choose currency pairs that have the most favorable positive results.
Forex Expert Advice
- You should start small trading until it is absolutely clear what Forex is and how it works. Do not immediately invest large sums.
- Be sure to use stop loss.
- Do not immediately use a large leverage. It is better to use shoulders from x5 to x25.
- Invest real money only after sufficient practice on a demo account.
- It is better to start making money on Forex with trading on gold and silver than on currency pairs.
- Do not allow yourself to control emotions. If a deal becomes unprofitable, it’s better to exit the trade than try to recoup.
In order to quickly achieve success in Forex trading, experts advise:
- Keep abreast of innovative ways to invest.
- Listen to the advice and forecasts of trustworthy brokers.
- Constantly study charts and indices for technical analysis.
- Take special courses in market trading.
- Regularly review the reviews of Forex brokers, as the opinion of users is sometimes the most objective.