Foreign exchange refers to the trade of one currency in exchange of another. It is also referred to by its abbreviation ‘Forex’, which is a portmanteau of ‘Foreign’ and ‘Exchange’. The practice of exchanging currencies is widespread and a common practice throughout the world. Each day, trade is done by the millions. In fact, between $1 Trillion and 1.5 Trillion USD is traded everyday on the Forex markets every single day. Furthermore, with the increase of global GDP and growth of economies everywhere, this trend is only expected to continue growing.
Unlike other trading systems, like say the stock markets, the commodity traded here are not physical goods or their paper representatives. On the contrary, the trade done here is money itself. Forex is done through the buying, selling and trading of the currencies of different economies. Forex markets have a global footprint and operate throughout the day, without stopping for a moment. Furthermore, these markets do not have a single regulatory body; each country has its own regulatory mechanism that lays out rules and guidelines on how the transactions are to be carried out. However, due to the fact the market is spread across the entire world without a real border or a barrier, one can consider it to be quite fluid and free when compared to other trading systems. While Forex is one of the principle tools that the world uses to promote the interchangeability of currencies, its uses go beyond just promoting global trade. It is also possible for one to grow and maintain one’s wealth through the Forex markets. In fact, some of the wealthiest people in the world have Forex as part of their portfolios where they have invested their wealth. For example, the investment guru Warren Buffet, has invested over $20 Billion in various currencies on the Forex market. Of course, the Forex market isn’t just for the rich. It’s in fact open to anyone and everyone who has money to spare. What used to be a tool of the super wealthy is actually something that even the common man can afford with some amount of work. There are today systems in place, both online as well as offline which provide a means for the common man to be a part of this global market. Before one can get into this global marketplace however, one must pay attention to details and make sure that he has the necessary tools that will help in navigating the marketplace. While the list isn’t extensive, here are a few guidelines one can start off with:
1.) Extra Wealth: Forex trading is quite similar to stock trading. There are risks as well as benefits. If one doesn’t have money which is ‘expendable’, they should not get involved with Forex trading. While it has the potential to make millions, it can also cause them to go broke.
2.) Ready For Losses: This is related to the above point. Before getting started, one must accept that there will be losses. While not all of them will result in a loss, some of them definitely will and it should be considered part of the overall package. In other words, one must be prepared to accept losses.
3.) Willingness To Learn: Just like any other skill, Forex trading requires a lot of learning. If one wishes to enter Forex trading, they should be willing to learn a whole lot of new stuff to get familiar with things.
4.) A Clear Plan: There must be a clear plan on what is expected from investing in Forex. Whether the investment is for wealth creation or preservation must be decided beforehand.
5.) Find A Good Broker: One can trade without a broker but if the trades are being done through a broker, the person must have the necessary skills, knowledge and ability expected of a forex broker. Proper consideration must be done regarding a broker’s experience, track record and overall performance in the field, before handing over money.
6.) Be Patient: This is probably the most important of all skills. It’s necessary that one remains patient with forex trading, because just like success with anything else in life, this will also take a bit of time. In all, Forex trading can be an excellent means for one to preserve as well as grow their wealth. It may not happen overnight and will take a lot of effort. But if done right, one can be glad with the rewards and the benefits that can be reaped from it. ~*~*~