Forex is a speculative market based on the exchange of currencies. Forex trading is the trading of financial instruments that have currency pairs as their underlying asset. For example, the currency pair called the Euro Dollar goes up if the euro is better, and goes down if the dollar is better. We’ll go into more detail as the course goes on. We’ll discover how Forex works and how you can trade online from the comfort of your home and earn on currencies. No degrees are required, there is no need to have many years of experience, and there is no age limit. The only thing you need in Forex trading is a bit of practice, passion, and daily news. Do you think you can spend one hour a day trading? Do you think you can do it? We think so.
The first good reason to trade forex is: everyone can do it and there’s no age limit (but of course you must be of adult age to start)
Forex market, large and fair
The Forex market is huge: it is the largest in terms of transaction volume. In addition to the size (not physical, but transactions-wise), it also boasts another truly exceptional factor, which distinguishes it from other types of market: equity. The huge volume of transactions prevents the market from being dependent on big investors, who are therefore unable to swing it “their way”. The currency market only depends on the economy and macroeconomic factors as we will discover during this course.
Still speaking of equality, or a position of equality for all market operators, Forex “insider trading” (i.e., using secret information) to take advantage of the market is impossible. It is impossible because all the information you have for this market is always available to all investors at the same time.
Another advantage of Forex is that it is less risky than other types of investments. In fact, no matter how much a currency can depreciate, it will never go down in a day, you always have time to forecast and resell. A currency is linked to the economy of a country and the era in which the Deutsche Mark’s hyperinflation led it to be worth a fraction of the US dollar are over. So, in a nutshell: Forex provides earning potential and lower risks than trading shares.
When investing, reference should be made not only to earnings, but also to costs. An operation may provide for commissions or margin payment. Speaking of margins, this is a fundamental argument to understand how online trading works through broker platforms, so we advise you to study it thoroughly. Margins are what we practically invest in Forex as we use leverage (another advantage).
This advantageous element definitely deserves its own space. Leverage is a mechanism that allows us to invest large amounts of currencies on a much lower budget. This is possible because by paying the “guarantee margin”, the broker concedes us a sort of loan, which is autonomously controlled in order not to incur economic damage as a result of our faults. The broker allows us very fast earnings through leverage, which is a tool that amplifies the intensity of operations. Because of this, we can earn quickly but also lose quickly. However, you’ll never go “into the red” with the broker. Debt positions are never possible, at least not with the safe and authorized brokers we recommended.
Simplicity of trading
To trade Forex online, trading platforms are used, i.e., software that allows us to:
- choose a currency pair to invest in
- decide the amount
- open up or down positions
- set a stop loss and stop limit
- follow a trend with a graph in real time
- close the position when we consider it appropriate
Stop Loss and Stop Limit
Stop Loss means to halt losses, while stop limit means “stop to gain”. These are two values that you can easily set up using the trading platform. Stop loss allows you to automatically close a position if the instrument you purchased (e.g., EUR/USD) falls below a certain value (which you predetermine). On the other hand, stop limit allows you to automatically close a position if the instrument you have purchased (e.g., EUR/USD) rises above a certain value (which you predetermine). This way, you can collect the profits accrued up to that moment.
Go to the next lesson – Forex terminology