The whole Internet is full of job offers in the Forex market. What it is, how to make transactions, which brokers to turn to, how to protect yourself and not fall for the scammers and a lot of other useful information can be found in this article.
Forex working principle
Forex is an interbank international currency market. Its turnover is $ 4 trillion a day, thanks to which it occupies its niche in the global financial industry.
This market is a continuous fluctuation of Forex quotes (currency pairs in relation to each other), due to which it is possible to calculate to some extent changes in the chart, which of the currencies may soon become profit or loss. It is impossible to predict the interbank rate, as the system provides a real price, which depends on the supply and demand of all participants involved in market bidding.
Forex trading takes place every second, and the change in currency occurs at the expense of buyers and sellers. If 1 euro at a certain point in time was purchased for 1.1419 US dollars, then in a second the sale transaction may already be equal to 1.1417. In this case, it is considered that the rate fell by 2 pips (points).
Forex Features
The Forex market has its own characteristics. What is it, what are the distinguishing features of this exchange and is it possible to compare the ongoing processes with the usual currency speculation?
- Liquidity. Due to the high average market turnover, trading positions quickly open and close, which affects the rate of change of the currency.
- Globality. Due to the lack of centralized control, collusion for price manipulation is excluded.
- Access 24/7. It is due to the presence of traders in different time zones, while Forex does not work only during weekends and holidays.
- Ease of participation. Everyone can open and replenish a trading account by identifying themselves with an identity card and confirming their place of residence, and the procedure itself will take a maximum of several days. Data such as place of work and education do not require confirmation.
- Low cost. More brokers appear on the market, and competition between them has a positive effect on their customers. Now you can get free news and analytical support, open and maintain a trading account.
- Large selection of financial instruments. Due to the diversity of the Forex market, you can choose the most suitable currency pair.
- Good potential return. High changes in exchange rates (up to 150 pips per day) provide high income, but do not forget about the possible risks and losses.
- Internet trading. Transactions can be made using the Internet using a personal computer or mobile phone.
- Informational transparency. Currency fluctuations are influenced by world events, which can always be found in the broker's news feed.
- Margin trading. To conclude transactions, it is not necessary to have the required amount if a margin has been deposited on the guarantee and trading account, as the pledge is also called.
- The equivalence of trends. It is not difficult to buy or sell currency, as there are no restrictions on the conclusion of transactions and the time of operations. The reason is the independence of the exchange from one country.
What currency pairs can I use on the exchange?
All Forex currency trading is based on a change in the exchange rate of money pairs. There are certain features in writing a currency pair - the first is the base currency, and the second is the quote currency.
This can be considered in more detail using an example: EUR / USD 1.1400 stands for: 1 euro equals 1 dollar 14 cents.
Conventionally, the Forex currency market can be divided into the following groups:
- The base currency is the national one, and the quote is the US dollar (GBP / USD, NZD / USD, CHF / USD, NOK / USD, etc.).
- The base currency is the national currency, and the quote is the Japanese yen (AUD / JPY, NZD / JPY, CAD / JPY, etc.).
- The base currency is the national currency, and any currency that does not belong to the first two groups (GBP / AUD, NZD / CHF, USD / CHF, EUR / CAD, etc.) can serve as a quote.
In general, Forex trading takes place with the participation of 70 currency pairs. At the same time, the most popular currencies can be distinguished: US dollar, Euro, Swiss franc, Japanese yen and British pound.
How does a trader work?
If a trader’s account is credited with $ 500, and the free leverage is 1 to 100, he can use transactions worth up to $ 50,000. These funds are not returned to anyone, since in fact the trader does not receive them, but can manage them within the account.
If a trader, after studying the situation on the currency market, concludes that in the near future it will increase, that is, rise in price, the Forex indicator of the British pound against the US dollar, he makes a corresponding rate. To do this, the trader buys the necessary or affordable amount of British pounds. When the course, in his opinion, should fall, the reverse operation occurs. The difference that is obtained (spread) goes to the balance.
In case of an error, the trader loses money. He has to close positions at a loss-making rate to maintain the balance in the account. The lost amount is covered from own balance. Therefore, when playing on the Forex exchange, each participant must be extremely careful and not use all the leverage, because not only potential profit depends on it, but also a loss that can be incurred in case of erroneous assumptions.
How to reduce risks to nothing?
How to make money on Forex will be clear only when it becomes clear how risks can be minimized.
At its discretion, the trader has the right to set the limit on the loss of the transaction. For example, if the amount of losses cannot be more than 10%, then from a failed transaction of $ 100, 90 will be returned to the account. This is easy to do on the trading platform by creating a stop-loss (order to close when the set percentage is lost). At the same time, you should not risk the amount that can cause damage to your personal budget. You need to act sensibly, because where there is a high opportunity for profit, there are always big risks.
Who can invest?
So, Forex - what is it: the possibility of earning for each or a limited circle of people? This can only be understood by learning who can actually be a market participant:
- Central banks (purchased foreign currency to stabilize the national).
- Private banks (make the main cash flow).
- Legal entities (create a stable volume in the currency market).
- Individuals (make bets thanks to brokerage companies and banks).
Forex Trading Sessions
Trading session is a time period during which major world exchanges and banks operate. At different times, the activity of trends decreases or increases, so you need to decide when to conduct transactions. The entire strategy of Forex trading sessions is based on a temporary principle.
Bidding takes place in the following order:
- The Asian session opens trading on the stock exchange first. The market is calm at the moment and is characterized by low liquidity.Between 3: 00-12: 00 it is worth paying attention to the currencies of Asian countries. 4:00 is considered to be the beginning of large trading. The session ends with a jerk in euros.
- The European session starts at 09:00 and lasts until 17:00. Then the market volatility increases, and trading takes place with the main currency pairs.
- The American session is a time period from 16:00 to 24:00, during which American banks set and maintain their national Forex indicator.
- The Pacific session or the calmest time on the exchange starts from 01:00 and lasts until 4:00. Small fluctuations associated with the rest of traders, this is how they usually characterize this session.
Why is Forex considered a "scam"?
Statistics show sad data - 80% of traders are at a loss. It is this category of people that spreads the opinion that Forex is another way to waste money. Is it true? And what about those for whom Forex trading sessions have made a profit? Most talk about their failures, due to which the success of good traders is not visible. Why does this happen? You need to understand the system of earnings, and not blindly follow the slogans of brokers, among which there may be scammers.
How not to fall for the scammers?
How to see and consider for offers of earnings of Forex brokers, what is this trap?
- Loud slogans like “it's easy to earn a million without doing anything”, “You have a unique opportunity to invest in a new broker without a commission, for which you will soon receive tens, hundreds of times more than what you invested at the very beginning.”
- If the broker with whom you plan to cooperate, says that no special knowledge is needed for trading.
- When a broker insists that having invested money, it is impossible to lose and incur a loss.
- When you hear about the possibility of not doing anything at all, after all, a free adviser or robot will put the necessary Forex quotes on its own.
- When a broker strongly recommends placing bets on all money or borrowing, explaining this as the impossibility of losses.
Top Forex Brokers
It is better for novice players to pay attention to the rating of Forex brokers, proven over the years, which will really help to avoid scammers:
- Alfa-Forex (the leader in Eastern Europe in terms of cash turnover and a member of the Alfa Group Consortium, one of the largest investment groups in Russia, having begun work in 2003).
- Alpari (Russia's leading company with a spotless reputation, which, thanks to its customer focus, expands its points of influence in the world, having appeared back in 1998).
- EXNESS (implements important socio-economic programs, provides a flexible approach to its customers. On the market since 2008).
- FXPro (occupies a high niche in the ranking of Forex brokers due to its client base in 150 countries. The work starts in 2006).
- Forex4you (having started its work in 2007, the company is rightfully among the five leaders in Russia and the CIS countries).
- InstaForex (high liquidity and an extensive client base, which has been developed since 2007, are its undoubted advantages).
- AMarkets (having appeared back in 2007, the company is positioning itself as one of the major leaders in the field of investment and trading. It regulates its work by the Central Federal Financial Fund).
- Forex Club (the company was created for beginners and professionals in 1997 and still holds a leading position in Russia).
- FreshForex (no less well-known company began its work in 2004 and confidently entrenched in the online trading market).
- NordFX (an international company established in 2004, its hallmark is the minimum deposit, which is only $ 5).
Forex Bonuses
From this article it becomes clear how to make money on Forex, but how is it best and most profitable to do? With the help of bonus programs:
- Welcome bonus (granted to the trading account after opening. Thanks to it, the trader has the opportunity to gain the necessary experience in the Forex trading session).
- Deposit bonus (having replenished a trading account, a trader can get a deposit bonus, which some brokers can serve as a margin).
- No deposit bonus (one of the best bonuses that can be received without replenishment of the account and used as a margin).
Forex Stocks
Forex brokers provide a large number of stocks to their clients, which makes trading even more interesting and profitable. In practice, the "Invite your friend and his friends" promotion is very common, as any company is interested in attracting new customers. On the stock exchange you can often find a Forex rebate (cashback), which returns part of the spread to the trader's account (price difference between buying and selling). Additionally, depending on which broker the player uses, you can become a participant in the Forex Freebies promotion. But to receive a prize in the form of various devices or a training course, certain conditions must be fulfilled.
Summarizing
Forex trading can be a good profit or a big failure, so you need to take reasonable risks and use all the opportunities that brokers provide. The choice is everyone ...
