If you’re considering investing as a beginner, you may have looked at the U.S. stock markets and realized that to begin trading, you need a considerable amount of start-up cash. What most new and potentially great traders forget is that they have better options than the New York Stock Exchange and NASDAQ. And that option does not require the same amount of start-up capital to get rolling. We are talking about the foreign exchange market, colloquially known as the “forex.”
This alternative may sound complicated and exotic to the layman. In actuality, it is a much more focused and less erratic system when compared to domestic markets. The benefits the forex can provide to you are equal to the amount of understanding you have of the system. As with anything, the more you know, the better you fare. Luckily, the forex seems to be much easier to become familiar with and should be any new trader’s first venture.
An Introduction to the Forex
The forex is the most active exchange on the globe. Estimates put the daily volume at around $4 trillion. Whereas the U.S. exchanges trade stocks, the forex only trades currencies. Every country (except the Eurozone) has its own individual currencies. Those same currencies move in value daily due to variables like government policies, private investments in the country, natural disasters and many others.
Also, unlike the U.S. stock exchanges, the forex has its own website with learning sections to properly introduce you to the world of foreign currency trading. Trading stocks usually require a broker, whereas the forex requires your attention, willingness to learn and a computer.
Volatility: Risk and Reward in Currency Markets
The number of factors that can contribute to a country’s currency value is nearly endless. While that seems intimidating, the more you learn about the currency market, the more you will be able to recognize and categorize the variables that affect currency price. Government policy is one of the largest contributing factors, as are natural disasters. Also at the top of the list should be investor activity. A few large investors either buying in or pulling out can make or break a country’s currency. While the latter is not as common a factor, it still needs to be considered. Seasoned traders are a great help when it comes to volatility. Part of learning the forex system is also learning the contributing factors to currency value so that you can make smart trades. Scouring the Internet will turn up valuable tips and analyses. Just as an example, currency analyst Christopher Vecchio goes over the factors that made the dollar “inch back” in relation to action taken by the Federal Reserve. It is analyses like this that can help you make decisions on your trades. Volatility is a reality in any investments but it does not have to be a hindrance.
Turning Pro and Conquering Currencies
Let’s face it: you want to be a good trader, and you want to make money. Luckily, the forex is such a large market that the resources are nearly endless. Just like trading stocks, trading currency has its basic rules for making money. There are resources available to help train you as a successful currency trader. The best part is that you do not need to have the massive capital to get started. Just about anyone can begin trading foreign currencies tomorrow or even today, depending on how ambitious you are!
This article was written by Richard Craft, an MBA student who hopes to help you with your personal finances. He writes this on behalf of Hawthorne Global, your number one choice when looking for a Houston customs broker. Check out their website today for all your needs with regards to international logistics!