The Forex Trading market never ceases to grow, it gets bigger and bigger every day. Every day trillions of dollars are traded in the foreign exchange market. Many have had an opportunity to start trading on their own at the comfort of their own homes using the online platforms, some are professional traders who have been doing it for as long as the experience goes. Everyone can do it, beginners and professionals have been afforded the same platforms, but experience and knowledge are still a necessity.
It is best to learn forex fundamentals before you decide on taking forex as your path in life, there are a lot of surprises in this market. Trading is all about learning and knowing the market, strategizing, and deciding whether to sell or to buy.
There are so many useful indicators, some of which are free and resourceful to help you decide on your trading moves. Traders speculate on movements each and every single day, there is no central market and thus your trade around the clock. You may love the market for its liquidity, as in 2021, the average volume traded per day is beyond $6,6 trillion. I cannot make these things up, there are tons of moves to make on the forex market platforms.
Trading is diversified, there pairs which stem from the eight major global currencies such as the US dollar (USD), Euro (EUR), Japanese yen (JPY), British pound (GBP), Australian dollar (AUD), Canadian dollar (CAD), and the Swiss franc (CHF) and on top of that there are so many regional currency pairs available to trade, giving you ample opportunity to turn a profit.
The market only closes over the weekend, and so you are able to access it 24/7 from Monday to Friday, giving you enough chance to decide how and when to trade. Forex is leveraged, helping traders to both buy and sell large quantities of currency for a potential profit or loss.
Forex offers low commissions to 0 spreads. There are firms that will charge you low costs and fees to use their platforms, some only charge for the bid/ask spreads.
The four major pairs in Forex are EUR/USD (euro/dollar), USD/JPY (dollar/Japanese yen), GBP/USD (British pound/dollar), and USD/CHF (dollar/Swiss franc). These are the ones that many people focus on when they start trading. The emerging pairs are AUD/USD (Australian dollar/dollar), USD/CAD (dollar/Canadian dollar), and NZD/USD (New Zealand dollar/dollar).
The major currency pairs account for 95% of all speculative trading in the foreign exchange including retail forex. US dollar dominates in the major currency pairs.
Any pair of currency that doesn’t include a US dollar is known as a minor currency pair or a cross-currency pair, best examples include, EUR/GBP (euro/British pound), EUR/AUD (euro/Australian dollar), GBP/JPY (British pound/Japanese yen), and CHF/JPY (Swiss franc/Japanese yen).
Brokers (Chosing one)
We have covered an article about how forex works, and the importance of a broker. So, you can’t trade forex without a broker. There are so many brokers to choose from. However, you have to be wise when choosing a broker – look at what happened to JPMarkets. You can easily choose a reputable broker, but still, be careful about the choices you make.
It will be up to you as a personal choice – when it comes to trading, you have to consider the pairs you want to trade, the type of platform you are most comfortable with, trading requirements, etc.
You have to consider the trading cost, compare the fees (Spreads, commission and overnight fees).
Most brokers use MetaTrader 4 and 5 (MT4 and MT5) which are industry-wide platforms. Some brokers build their own proprietary platforms which I may find hard to trust myself, but that’s just me. Choose the platform that will best suit you.
We also spoke about Demo Accounts as a great way to start learning about the fundamentals of forex trading and let how to place orders as if using a real account.
The majority of traders in South Africa uses the MetaTrader mobile app to trade, either with the Android or the iOS.
Ensure that the customer support quality is excellent before you choose the broker. There are a lot of good brokers with terrible customer service – and it’s often a bad thing.
Ensure the broker offers the currency you want to trade. However, all brokers trade major currencies/pairs such as EUR/USD (euro/dollar), USD/JPY (dollar/Japanese yen), GBP/USD (British pound/dollar), and USD/CHF (dollar/Swiss franc).
Ensure the broker is regulated, and also consider the payment method options. You may want your money straight into your bank account rather than on your PayPal, skrill, pay fast, etc. Most South Africa don’t prefer PayPal anyway, so please check that out, it is important.
Check the broker’s account types, the types they offer, and check the margin, cash, PAMM accounts, each broker has different accounts offered.