Did you know the largest financial market in the world is Forex? Probably because the risks involved in this trading is tolerable as the amount being invested is only under risk and a substantial return from investment could be made within a short period of time.
Online trading involves the buying and selling of finances via a trading platform. Internet based broker houses usually provide the investors with this platform. Online trading takes place in the form of currency, commodity, shares, etc.
The World of Forex
Forex, which is the short form of foreign exchange, involves trading of foreign exchanges online via a trader platform. For instance, you exchange 100 euros into dollars. After 2 hours you find out that dollar has revalued against euro and you exchange it back to get back 102 euros. You have made a profit of 2 dollars and this is the mechanism behind the trading of Forex.
Difference of Forex with Other Markets
Currency trading does not take place under any regulated body. Therefore, regulatory bodies cannot influence in the trading of Forex and use it for their own benefits. There is no rule of thumb in the Forex market as the patterns are unpredictable and you do not have to be a professional or expert in finance to be a trader.
How to start?
You need to get yourself registered in an online trading platform commonly referred to as dealer houses. One such reliable broker house is iFOREX. However, the Forex market does not have a commission system. The dealers unlike brokers assume all the risks for a transaction. The dealer usually make their money via a bid-ask spread. A bid-ask spread is the difference between highest price an investor is willing to invest with the lowest price the seller will sell the instrument. If the price overcomes the cost of spread, that amount becomes a profit for the investor. This is the mechanism behind making profits out of your investment.
Online Trading Platform
The platform also provides some additional functionality to the users. They come with a calculator and currency converter which makes it very convenient for investors to do their calculations online. The users are also kept updated about the recent business trends through alerts and newsletters. Some platforms also provide updates through their availability in social media. For instance, iFOREX comes with a Facebook page and a twitter channel.
Types of Accounts
- Demo account: Recommended for beginners, this account will only show the mechanisms behind Forex trading and will not bring into consideration any financial transaction. After building confidence, new traders can shift to other account types.
- Standard, mini or micro account: In this account the user can make money by applying the strategies learned while using the demo account.
- Managed account: This type involves employing an expert manager to monitor and record activities of the account.
Some Basic Tips
- Plan very well before acquiring the thrust
- Keep a record of everything
- Keep your transactions simple
- Look for patterns which are profitable
- Analyze everything very carefully
The Forex trading world is attracting new investors day by day. Associated with many benefits and an ease of operation, this trading option certainly looks promising in coming years.