Forex (FOReign EXchange) is the interbank market, where currencies are the main commodity. Online currency trading, globally, is no different from currency exchange in any bank: a trader buys currency at a certain price, waits for its change and sells the currency at a new, higher price. The difference in price when buying and selling is the trader’s profit.
Forex trading is the most popular way of online trading. Trading on the stock exchange has acquired such vogue, firstly, because a trader does not need large investments to start trading. It is enough to start with a deposit of $500, gradually increasing it in order to develop trading. Thanks to the leverage provided by the broker, a trader can open large deals with even a relatively small initial deposit, which gives maximum opportunities for profit.
Deals in Forex can be opened with very small lots, which is strongly recommended by market experts in relation to beginners, as well as with quite impressive amounts, which makes it possible to make large profits.
The second factor contributing to the popularity of Forex trading is, of course, working hours of the market. Trading on the currency exchange is conducted around the clock, five days a week, from Monday to Friday, excluding major holidays, which gives the trader the opportunity to trade in his/her free time. Trading sessions in the market are divided by the location of the exchanges where trading takes place. Each session has its own characteristics, and only certain currencies are available for trading. With this information, a trader can plan his/her transactions.
The advantages of trading in the Forex market also include the fact that a trader does not need any additional equipment, only a computer or smartphone with access to the Internet. And that’s all! Wherever you are — trade and earn!
Work in Forex means comfort, because you can choose a workplace yourself: cozy kitchen, when everyone is already asleep, or a favorite coffee bar in the city center.
A large selection of proven trading strategies allows a trader to choose the suitable methods of work depending on the goals, time frame and even character traits.
But that’s not all! Currencies are the most volatile trading assets, the daily turnover of the Forex market is about 4 trillion dollars. Everyone can earn in this ocean of money.
Hours of operation
The Forex market operates around the clock, five days a week. Such a regime is created due to the fact that the exchanges on which currency is traded are located in financial centers in different parts of the world and their work covers all time zones. The working week in Forex starts in Tokyo at 23:00 GMT, and ends only on Friday at 22 hours in Chicago. Thanks to this mode, a trader can always make time for trading, as well as choose the appropriate schedule. The market is conditionally divided into certain trading sessions according to the rule of geographical distribution. Each session has its own trading style, and each has “favorite” currencies.
There are four main sessions:
- Pacific. The peculiarity of this session is that other exchanges do not trade at this time, since it is night in other financial centers during this time. Due to this fact, the Pacific trading session is very calm, without much fluctuations. The main currencies are New Zealand and Australian dollar, Japanese yen.
- Asian session begins its work later and has a more aggressive trading style. The main currencies here are Japanese yen, yuan and Singapore dollar. During this session, it is possible to expect large fluctuations and high profits.
- European. When European traders wake up, the speed and volume of trading is gaining momentum. The main flow of deals begins with the opening of the stock exchange in London, then, by noon, there is a certain decline, and by the evening, America gets into game, and there comes the time of maximum market activity. The main currencies of the European session are euro, US dollar, Canadian dollar and British pound.
- American. This session, like the European one, is the most active. Here, American and Canadian dollars circulate.
How to trade currencies in Forex
All currency trading is done in pairs, you have to buy one currency and sell another currency in the Forex market. The most famous and popular currency pairs among novice traders are USD/EUR (US Dollar and Euro), USD/GBP (US Dollar and British Pound), EUR/GBP (Euro and British Pound). The first currency of a currency pair is called the base currency, the second one is called the quoted currency. The value of a currency is determined by its comparison to another currency. For example, if we see that the EUR/GBR currency pair is quoted as being EUR/GBR = 1.2500, we should understand that the British pound is currently worth 1 euro 25 cents. Basically, price changes can be visible on the basis of the last digit of the quote. This indicator is called pip.
One of the leading advantages of online currency trading is that with a large volume of trading in the market, fluctuations in quotes can reach high values within a short space of time. This means that with an intelligent approach, a trader can make a significant profit.
Minimizing the risks
Despite the fairly simple way of trading, online currency trading is associated with certain risks, and a trader should not forget about it under any circumstances. The consequences of a flighty attitude towards risk can come at a price. No one is immune from the wrong forecast, or force majeure in the market. However, at competent approach and careful attitude, risks and possible loss can be minimized.
- Psychology. It is one of the most important points to consider when talking about risk minimization. Cast aside all your pride and study the market from the very beginning: learn the theory, listen to the experts, read analytical articles. Forex does not forgive “don’t care” attitude, it requires knowledge and skills.
- Define a clear trend when entering the market. It is necessary to study and use technical analysis.
- Open a deal and do not forget to set Stop Loss right off the bat. It will help regulate the allowable loss limit and avoid excessive losses.
- Blind trust in trading robots and advisers also does not guarantee mandatory profits. The use of assistants is justified only if all the conditions specified in their description are met.
- Emotions — bitter enemy of the trader. It is necessary to trade on the basis of informed decisions, and not under the pressure of a spur of the moment thing. Analysis and usage of reliable information will help you make an informed trading decision.
Why is it profitable to trade in Forex with Umarkets? It's simple:
- over 70 currency pairs available for trading;
- modern trading platform that works without delay;
- leverage from the company (from 1: 100 to 1: 400) allows traders to trade amounts that significantly exceed their own deposit, and, accordingly, to get higher profits;
- accurate market forecasting, owing to the work of the analytical department of the company, makes traders confident in opening deals;
- no fees and low spreads — income without losses;
- training for beginners and additional education for experienced traders;
- and finally, constant support of traders by the company’s specialists at any stage of trading.
Despite all the attractiveness, trading in Forex is associated with certain risks, so this kind of earnings must be treated with the utmost seriousness. Umarkets introduces risk management principles for safe currency trading on the exchange. Together with our company, online currency trading becomes profitable and comfortable. Trade and earn in Forex with Umarkets!