Trading with currencies is not a new way to obtain profits that has emerged recently since currencies have been trading at the lake of history since the very appearance of money. What is more recent is the facility to be able to trade in Forex from anywhere in the world via the Internet from a computer, tablet or mobile phone and accessibility for retail investors. Nowadays, many people are making money doing Forex trading from home, either as full-time professional traders or simply dedicating a few minutes a day to locate trading opportunities and opening, monitoring and closing their positions.
A number of online brokers have also emerged that allow traders to buy and sell different currency pairs (and other instruments such as stocks, indexes, precious metals, raw materials, energy, etc.) through their trading platforms in return Of the payment of a small fee, called spread, which is based on a spread applied between the purchase price and the selling price of each currency pair.
The first thing you need to do Forex trading is to find a reliable broker forex teregulasi (see article: How to choose the right online broker?) And open a trading account (See article: What do I need to open an account in an online broker?) .
Most online brokers usually offer a demo account that comes loaded with a fictitious balance so you can do tests, with the same conditions of a real account, but without putting your money at risk. You can take advantage of this demo account to learn and develop your own trading system and as soon as you are ready you can open your real account and deposit funds to start buying and selling different currency pairs. The money you earn will be added to your account balance and you can withdraw it when you feel it is appropriate.
What currencies can I trade?
As we discussed earlier, the trader is responsible for buying or selling currency pairs. There are many pairs of currencies, which according to their volume of trading are often called major, minor and exotic. Some examples of major or major currency pairs are GBP / USD, EUR / USD (Euro vs US Dollar), USD / JPY (US Dollar vs Japanese Yen) or USD / CHF ( US Dollar vs. Swiss Franc). Larger currency pairs have a higher volume of trading and the spreads offered by brokers tend to be much tighter than those of smaller or exotic pairs which in turn tend to have greater volatility.
In each of the currency pairs, the first currency works as the commodity to buy or sell and the second currency works as money. For example if you choose the GBP / USD pair and open a buying position, you would be buying Pounds Sterling against the US Dollar. It does not matter what is the currency with which you have deposited funds in your trading account since the platform is responsible for automatically transforming the amounts.
How do you make money on the Forex market?
In Forex you can make money with the price fluctuations of the different currency pairs and you can do it both if the price goes up or down and you can choose 2 different options when opening a position:
Go long: open a purchase position if you believe the price will rise and then close the position with a sales order.
Go short: open a sales position if you think the price will go down to later close the position with a purchase order.
Buying cheap and selling expensive or selling expensive and buying cheap is the goal of the millions of participants in the Forex market. But, the million dollar question is:
How do I know when it is the best time to buy or sell?
There are two methods to try to predict the optimal time to buy and sell in Forex: Technical Analysis and Fundamental Analysis.
- Technical analysis:
It tries to predict the direction of the price by analyzing its evolution and using graphs with the different values it has been taking, looking for formations, signals of continuation or change of trends and being able to use a series of indicators based on mathematical formulas, statistics, ...
Technical analysis may seem a bit complicated at first but it really is a lot easier than you think.
If you want to earn money doing trading you must learn technical analysis properly. If you are a serious and disciplined person you can learn in a few months.
On the Internet there is a lot of free documentation to learn technical analysis and the most important is the practice. You can find some useful payment course but most will make you lose your money without having learned practically nothing. You can also visit our website from time to time or subscribe to our newsletter to receive our articles on trading automatically and you will not miss any. We try to offer you useful and explained articles in the easiest way possible to help you learn, avoid unnecessary mistakes and defend yourself in this exciting world of trading.
- Fundamental Analysis:
It also tries to predict direction and future price movements by analyzing the economic and political situation that may affect each of the currency pairs.
Fundamental analysis is often used by Forex traders generally for the long term but can also be employed by traders who want to take advantage of high volatility moments to earn money. These times of volatility usually occur after the emergence of important economic news and represent a good opportunity for profit in a short period of time.
For example, important news about the situation of a country like the United States can cause significant changes in the prices of currency pairs with the presence of USD. A good economic data of unemployment, an increase of exports, the announcement of a measure of economic stimulus of the federal reserve, can cause the USD to become stronger and therefore that the investors are launched to buy it increasing its value forward To other currencies as can be the opposite situation against a bad data.
Having an economic calendar on hand is a good option to be aware of this news, focusing especially on the most important as there are many throughout the day that will hardly have an impact on prices.
Professional or experienced traders can spot Forex trading opportunities using technical analysis and fundamental analysis although most use technical analysis. It is important that you learn to trade forex perform the technical analysis correctly and that you are taking practice and experience from the first moment. Over time, technical analysis will be your biggest ally to spot trading opportunities and make money on Forex.