The foreign exchange market can be a great place to add to your wealth, and forex, as it is known, involves the buying and selling of one currency for another, and the market works with two currencies, called ‘currency pairs’. A trader might exchange USD for Euros, or the Australian dollar for the Chinese Yuan, and, of course, the goal is the make money from the exchange. The forex market is huge, with companies, investors and private individuals, all trading currency, and if you are thinking of entering the forex arena, there is much to consider.
All currencies (including digital), have price fluctuation, with rates changing within minutes, as forex markets around the world are trading, and every currency has a spot price at any given time. The principle of supply and demand dictates whether a currency weakens or strengthens – a currency is demand will rise in value, while a currency that is not popular among traders will decrease in value. Buying in at a low price and selling at the peak is the name of the game for the forex trader, and should an investor think that the USD will weaken, he or she could exchange their dollars for a currency they expect to strengthen, and should they be right, the investor would have made a profit.
The Importance of the Forex Broker
There are leading forex companies in Australia that really do empower you in so many ways. You can use their platform to trade on MT4, which is the best market, plus they have a lot of very powerful features built into the platform, enabling you to analyse data and make informed decisions when trading.
You will have to familiarise yourself with the symbols used for various currencies:
- US Dollar = USD
- Euro = EUR
- Australian Dollar = AUD
- British Pound = GPB
- Swiss Franc – CHF
- Canadian Dollar = CAD
- New Zealand Dollar = NZD
- Japanese Yen = JPY
Currency pairs might be USD/EUR, or GPB/AUD, and with these examples, when you trade a certain number of USD, you are credited with the equivalent of EUR, or in the second example, trading British Pounds for Australian Dollars.
It is necessary to understand forex terminology, the acronym ‘pip’ stands for point in percentage, and the average currency pairs might move from 50-100 pips per day. Of course, the pip value is determined by the current value of a given currency pair, and one pip represents the fourth decimal place (in most cases).
Your Forex Partner
Any novice trader should join forces with a forex company, who will not only advise, they give you access to all the learning resources you need, plus you get to use their trading platforms, which use high-speed broadband, allowing for single click transactions.
Your forex broker is the key to profitable trades, and a quick Google search will take you to Australia’s leading forex broker, and with their expertise and full support, you can begin trading, confident that you have the best in your corner.