Successful Trading

EVERYONE CAN DO IT!

"Dollar shoots down by statements from Bernanke." When you read this news you are probably thinking 'Why?'. Why would statements of Bernanke (Chairman of the Fed, U.S. Federal Reserve Bank) immediately affect the price of the dollar? And why should I be interested in this? We still pay with the Euro? On the other hand, the interest rates on my savings account have never been this low and the inflation rate is higher than the interest rate I get! In order words: I am losing money when I don't act soon. Would this have to do with each other? The only thing I read in the news is about the economics and crisis. 

This blog will answer all your questions and will give you news, updates and insights on how currency changes affect your daily life and how to take profit our of this market! If you stay with us daily you will learn all you need to know in order to become a successful trader and you'll learn that investing in the currency market is indeed a safe financial investment!

FOREX FROM A TO Z

Forex (Foreign Exchange) trading is of all times, and everyone has been in contact with it. When you exit the Eurozone, you must exchange money for local currency. Trading currencies on the forex market is no different, you buy one currency and in the same transaction you sell another currency. However, you do not pay high commission fees; and even better, you can earn on the rise and fall of the exchange rate. Currency rates are constantly changing and are reflecting the changes in sentiment by the release of macroeconomic news, political news, technical factors and physical transaction volumes that take place all over the world. Examples include raising or lowering interest rates in a country, the unemployment rate, job numbers and political conflicts within a region.

The forex market has become the largest and most liquid financial market in the world with a daily turnover of over $ 3 trillion. It's success is based on the easy accessibility of the trade - anyone with Internet access can act - and the lack of data to be analyzed in order to be successful. Because there is no control of external financial institutions, the market has free rein. This means that no speculator, regardless of size, affect the exchange rate. Another important thing is that information  is published worldwide at the same time. This blurs the risk of insider trading. There can be argued that currency trading is fair and that no institution - how big it is - can affect the market.

The forex market is accessible thanks to the many brokers that offer the possibility to private traders to speculate on a rise or a fall in the exchange rate. The combination of an advanced trading platform with many orders and analysis capabilities and leverage makes currency trading attractive to private traders of each segment.

WHY FOREX?

Forex trading is one of the safest investments in the world markets, compared with other products that carry a financial risk factor such as stocks, options or traditional leveraged products. The forex market is open 24 hours a day, 5 days a week; between Sunday evening 22:00 GMT (opening of the market in Sydney) and Friday 22:00 GMT (closing market in New York). Forex traders have only a limited gap risk which is much lower than for example in trading stocks because the market is also open during the night. The so-called 'risk gap' is the difference between the closing price of the previous day and the opening price of the current day. The use of a stop-loss order is therefore much more effective. You can also determine at which level the stop-loss order is placed. In order words, the trade is able to determine its maximum risk before entering into a position.

The very wide opening times of the market, the possibility to self determine the stop-loss risk, and simple pricing are some examples of why the forex is very accessible. There is no other way of investing where the risk can be defined in advantage with such certainty.

The daily volatility in the major currencies (EUR, USD, JPY, GBP, CHF, CAD, AUD) are average 100 pips per day. In currency trading, pip changes in the exchange rate. A pip represents the smallest unit of the exchange rate and in most currency pairs the fourth decimal place. Due to the high volatility in the market and the accessibility of data, the market is interesting for both day traders and long term traders. What also makes this market attractive is that most brokers only charge  spread and no additional costs such as commissions. The above factors make the currency trading is one of the cheapest and transparent financial markets in the world. 

When you search for a broker it is always important to look to the spreads they charges. Most broker charge a variable spread which can look cheaper at first. But when you start trading you'll notice that trading with a variable spread is more expensive. Especially at moments when it is interesting to trade the spread can become up to 5 times as wide as expected. With fixed spread you know what you pay, no matter the market circumstances. Here you will find a spread sheet of one of the best and cheapest Forex brokers in the world, called GKFX Financial Services. 

KNOWLEDGE OF THE MARKET

Successful traders are informed traders. The key to success lies in the knowledge accumulated before you can start trading. It is extremely important to get information about the trading platform you are using. Most brokers offer an advanced trading platform, the MT4 platform is the best platform to use. New traders should ensure that they internalize the platform, good guidance here is essential.

A second important part in knowledge acquisition relates to the factors that influence the market. The two main approaches to analyze changes in the Forex market are Fundamental Analysis and Technical Analysis. Fundamental analysis focuses both on financial and economic theories as to political developments in order to determine how they affect the supply and demand in the market. Technical analysis focuses on price levels and trading volumes. The technical data is used to form the basis for future levels of the market expectations. Fundamental analysis focuses on the cause of movements in the market, while Technical analysis focuses on the effects of movements in the market.

KEY TO SUCCESS

Forex trading is seen as the future of a secure financial investment. Liquidity, volatility and easy hedging makes the Forex market an interesting source of investment relative to your savings account or other financial products like stocks, options or other leveraged products. However, a successful trader is only successful when he has a thorough knowledge of the facts.

Make sure you are well informed about the trading platforms and the factors that influence the market. Technical Analysis ensures that you are able to recognize trends and a good knowledge of outcomes of macroeconomic data are essential to be successful. Continue to invest in knowledge and experience and you will find that currency trading is indeed the right path towards profitable investment.

FREE EDUCATION IN FOREX

Please contact info.desk@gkfx.com for more information about our excellent free education program.