A Broker That Will Trade Forex For You
By Space Coast Daily // July 2, 2021
Foreign exchange is a great way to make your unused money work. And while you don’t have to say “adieus” to your main career to get into FX trading. We will tell you how.
Forex Trade Come to Your Aid
Forex is short for foreign exchange. It’s the market where currencies from all over the world are sold and bought. And from the price difference between, let’s say, Japanese yen and Swiss franc, you gain your earned profit.
So, the classic law buy cheap, sell high is what Forex is based on. During these pandemic days, people come to Forex more and more; some search for a new career. Others want to make their money work and get a trading account.
Good Reasons to Trade Forex
Let’s see why exactly this market could be promising to you too.
Perhaps, Forex is the most accessible market of all. It’s even more beginner-friendly than CFDs. And here’s why.
Forex has pretty tight spreads in the context of pips — price interest point. It’s a price move that is mathematically 1/100 of 1%. And thanks to this, you can have a pretty low capital when starting out. Even $20 is an acceptable sum in this case.
What’s even cooler, Forex offers high leverage: usually 50-to-1. Leverage is basically borrowed capital, which allows you to make deliciously high profits while you invest a small sum.
But keep in mind: the higher the leverage, the bigger the risk. If you experience losses, you will owe an extra money amount added to your initial investment.
■ High Liquidity
Forex is probably the largest investing market. This naturally leads to amazingly high liquidity. Almost every minute, there are filled trade orders here.
And it’s a good thing. First, it prevents price anomalies: stable currencies are bought and sold at an expected rate, usually. (Unless there are some major international events). Besides, it’s hard to manipulate currency prices due to this kind of liquidity.
Second, volatility doesn’t jump or fall down like a tipsy jerboa during the closing/opening hours. Currency price patterns remain consistent throughout the day and once you gain experience, you can use them to your advantage.
■ Volatility Is Good
Just like on the CFD market, volatility is your best ally when it comes to Forex. If you analyze the situation with the currencies that you trade and find the right moment to place a trade, you will hit the jackpot.
Sometimes event the most stable currencies get off the leash and make enormous price swings. For example, in spring 2020 British pound was sensationally cheap when traded against the USD.
■ No Regulation
Unlike other markets and commodities. Forex isn’t strictly regulated by some central body. Although occasionally central banks from different countries have to execute interventions — this happens when their national currency loses its value.
But these incidents are rare. In the long run, this kind of decentralization makes Forex somewhat more reliable than other markets.
For instance, if a company like Tesla or Apple publishes an unsatisfying quarterly report or makes a certain unfavorable statement, its stock can collapse overnight.
■ Lower Expenses
Another nuance that makes Forex attractive is its “cheapness”. Most of the brokers charge no commission since they make their money from the currency pair spreads — price differences, in other words.
If you compare it to trading other commodities/securities — brokers will inevitably charge fees and commissions.
Another killer advantage is that the foreign exchange market is available 24 hours. You can trade at any time you want, which opens amazing prospects in terms of strategizing.
For instance, you can benefit from different time zones. While it’s nighttime for a given market — Moscow or Beijing — you can gain from the fact that their currencies are stabilized at this moment: high-volume trading, long positions, etc.
At the moment, there are 28 major currency pairs on the Forex market. They include such currencies as the US dollar, Swiss franc, euro, British pound, yuan, and so on.
Their value is free-floating. It means it’s regulated by:
1. Demand. If traders want to invest in a certain currency, it goes up.
2. Situation. A country’s political or economic situation influences its money too.
3. Interest rate. Set by the national banks, it influences the rate as well — the higher it is, the bigger investor’s profits will be.
The top popular pair is USD/EUR. But you can try more exotic pairs. Such currencies as Russian rouble, Mexican peso, or Turkish lira can be extremely volatile. And volatility can be a source of wealth.
Why Do You Need a Forex Broker?
Trading Forex isn’t rocket science by any means. But it still takes time to learn the market and its nuances. And of course, you always need to “keep your finger on the pulse”.
In other words, Forex requires a good deal of time. And for the sake of a profitable maneuver, you might even need to sacrifice a few hours of your sleep.
Of course, you still can join the craft if you already have a day job. A lot of people trade Forex after hours. But some people don’t realize how much energy, time and nerves FX market takes.
This is when an expert brokerage firm could come in hand. The advantages include:
■ Profit. Considering how volatile Forex is, it can yield a more handsome profit than a typical savings account.
■ Time efficiency. Joining forex is like getting a second job. It takes focus, energy, calculating, and commitment to make money from it. And if your job is already demanding intellectually, you risk running out of breath.
■ Expertise. Professional brokers already know how markets work. They know where to seek opportunities and how to avoid threats. If you want to see your money bringing the tasty fruits of investing right now, you can skip months of study and invest in Forex.
But of course, you need to be wise when picking a brokerage firm.
Which Brokers to Trust?
It’s okay to be choosy when picking a Forex broker — after all, you trust them with your savings. So, here’s what to look for in a solid firm:
■ Regulation. Every broker must be licensed and regulated by a government body. For instance, it’s NFA for the US, FCA in the UK, CySEC in Cyprus, and so forth.
■ Reputation. Try to learn as much as you can about your broker. Search for feedback from the clients, read about the company’s history, check for how long they’ve been into business, etc.
■ Money. Check if it’s easy to deposit and withdraw your money. If getting back your funds is problematic —definitely skip on this broker.
Tools. Every high-level broker offers a whole repertoire of investment opportunities, as well as various tools. For instance, such platforms as MetaTrader 4 are a must for every legit company.
Support. Customer support is another requirement to pass the exam. Their client support must be in touch 24/7, providing help via chat or calls. If it’s dead — it’s definitely a red flag.
These are basic criteria, of course. We also recommend that you learn everything about a broker’s fee policy, possible insurance, inactive account charges, physical address, and so forth.
Grow a Money Tree
The Forex market keeps on growing every month. There’s a chance for every investor to earn some extra profit and for every aspiring trader to get a new career.