Let’s start with a basic fact; the forex market is among the most competitive and liquid entities in the whole fiscal world. While it may not be quite as popular as it once was (it is estimated that the market recorded a daily trading volume of $6 trillion during its peak in 2012), an average of $5 trillion continues to change hands during the course of every 24-hour period.
So not only does the market remain enduringly popular, but it is arguably more accessible than it has ever been before.
The accessibility and liquidity of this market make for a compelling, trading proposition, but it is also important to understand its uniquely volatile nature. After all, this is a derivative market that can drive margin-based returns, while you can also lose far more than you originally invested.
A Brief Forex Guide in 3, Simple Steps
With this in mind, you should not attempt to become a currency trader without first developing a clear understanding of this asset class and its surrounding market. So, here are three basic considerations that will help you on your way as an investor: –
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The Market is Accessible for 24 Hours Each Day
Aside from its volatility, one of the main challenges surrounding currency investment is its global nature and 24-hour trading sessions. The forex market is open all day for a total of six days each week, you can access it via the forex trading app, while there are three separate trading sessions that run consecutively in North America, Europe and the Asian-Pacific region.
It is crucial to keep this in mind, particularly as prices can change significantly during the course of a single session. This is why stop-losses and risk management remain crucial to currency traders, as they must be able to cope with the sudden fluctuations that take place while their attention is diverted from the marketplace.
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Knowledge is Power for Forex Traders
While a core understanding of the market’s structure is crucial, it is also imperative that you build a broad and impressive knowledge base prior to completing your first trade. This drive to learn should be part of a deterministic outlook, which understands that the market is governed by a number of underlying laws and rules which dictate how certain trends will play out.
By taking the time to comprehend these laws and the impact that they have in the market during both prosperous and austere times, you can begin to trade strategically and without the weight of emotion bearing heavy on you. This is why you should take your time as a novice, and only trade for real when you have the requisite level of knowledge.
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Online and Mobile Trading Helps You to Optimise Your Returns
Once you have built a solid foundation of knowledge, the next step is to apply this within a practical trading environment. This can be deceptively challenging, at least unless you register with an online trading account that enables you to access the market in real-time (and regardless of your physical location). You should also look to operate using a mobile trading application such as the MetaTrader4, which allows transactions to be completed on the move and often without a viable Internet connection.
These type of virtual trading platforms offer other advantages too, as they feature demo accounts that can be used for between three and six months while you are learning your craft. These account simulate real-time market conditions while allowing you to trade with virtual currency, providing the ideal opportunity for you to refine your strategies and develop practical skills within a risk-free environment.