What Is Forex Trading All About?
If there’s one frequently asked question but the most difficult one to answer is “What is Forex trading all about”. I always find it difficult to respond to this question simply because there is no one straight line answer to this question. It also takes a lot of my time just to try and explain it and I usually do not have enough time to do that because one question leads to another. I have also realized that most Forex blogs are filled with jargon and they are not as easy to understand for those who have no clue of what Forex is. As usual, I decided to explain this in the most simplest way which is through providing answers to the frequently asked questions because sending someone who is asking me to Google it is not necessarily assisting. I hope this will help.
What Is Forex?
Foreign Exchange popularly known as Forex/Fx is a global currency market with a current daily traded volume of $5.3 Trillions. In it, traders like me invest in the strengthening of one currency Vs the weakening of another. We Buy and Sell various currencies and other types of financial instruments that are available for trading. There is no recession in Forex market as investors can make money even from the weakening of the currency unlike in stock markets where the investor buys a share and only makes money when the share price appreciates. See the difference between these two markets HERE.
Who Can Participate in Forex?
Big financial institutions who are trading billions and also individuals who are trading a few hundreds/ thousands of dollars can participate. Just to give further explanation, most people participate in Forex but they just don’t know that what they are doing is actually Forex. A typical example would be someone who is not necessarily a Forex trader who is travelling to Australia from South Africa. When this person gets to Australia, he/she will be required to exchange the South African Rand to Aud (which is the Australian Currency) in order for that person to be able to spend their money in Australia. This person has just participated in Forex. But this is not about travelling but about Forex trading. So in short, in Forex we buy and sell money and there’s always two different countries involved. An example will be buying EURUSD which is Euro Vs US Dollar. As long as there’s money exchange, they’ll always be Forex.
Where Is Forex Done?
The buying and selling takes place in a virtual online platform which is provided by a Forex Broker which should be a regulated Broker, for the safety of your funds.
What Are The Requirements?
Because all the activities are done online, one needs to have a computer and internet connection. A bank account and of course to transfer the money to trade. You do not need to have a special bank card in order to add funds to your account as you can always opt for bank wire to deposit funds to your account. You must also be of a legal age (18+).
How Much Capital Can I Start With?
With some brokers, you can start with as little as $30 and most will say $100 minimum. But of course you stand a better chance of creating an income when you start with a bigger capital. See this post HERE for some suggestions.
Can I Really Make A Million Through Forex Trading?
Definitely, you can make even more than that. You just won’t perform miracles like turning a $100 into a million in a week (another comforting lie that most people would rather hear). See this post HERE for realistic goals.
Is Forex Trading Legal In South Africa?
Yes, Forex Trading is legal in South Africa and many other countries.
How Does One Get Started with Forex Trading?
You’ll have to register and open an account with a Forex Broker. Forex Brokers are the one’s who provide the platforms where we do all these transactions and they do offer a dummy account (demo account) which comes with virtual money to practice with. Once you know how to trade, you can open a real account where you’ll deposit your real money and start trading.
Is there any course that one needs to take to learn how to trade?
There should be a learning process of course. It all depends on the individual needs. The net is flooded with lots of Forex trading information. If you go online and just type Forex, you’ll see thousands of sites that are providing Free information or even free lessons. Some sites will tell you that using 1.2.3 doesn’t work and some will tell you that 1.2.3 works better. The reality of it is that there is just so much noise and to filter the noise out and only learn what you need to learn, the best way would be to find yourself a good mentor who can take you through the Forex Trading journey. It can be difficult to know what you don’t know. It is a fact that if you want to take a “short cut” in learning any skill, finding a good mentor will provide you with just that because you get to avoid the mistakes that they may have made and some difficulties that they may have encountered on their own journey. So you basically get training which is bundled together with a little bit of their bad experiences of which you should avoid (provided you do listen to your mentor though).
Can I learn how the Forex market works in just two days?
NO!!!!, you definitely cannot and I am aware that what I just said is a comforting lie that everyone would rather hear. Just like any skill that you may wish to be good at, you will need way more than just a seminar, 2 days, a week or even 4 weeks of learning. But once it is done, this is one of the skills that you’ll never regret ever learning.
Can One Make An Income Through Forex Trading?
Definitely, it can be done. But also understand that your earning potential will be highly linked to your start up capital as well.
I hope I have managed to answer most of your questions about Forex Trading. If you think so, kindly share this post for more people to see. Should you need a mentor, you can check my private lessons & mentorship HERE. Thank you for stopping by. Cheers for now.