For working and earning from home, Forex trading is one of the best options.This article will be the answer for those who want to know ‘ How to Start Forex Trading From Home’.
With the advent and the ever-growing ‘internet’, the jobs available for work from home are on the rise.
Starting Forex trading from home needs no heavy investments other than a computer with the internet connection.
You have to start with some money. But knowing the Forex market and the basic things about trading are more important than the investment.
The reasons for recommending you the Forex trading are many. Let’s go through this mini tutorial, which guides you to the forex market.
What is Forex?
- The exchange of money between the nations of the world is a continuous and ever going process.
- Forex is a short form of foreign exchange.
- In Forex, you are buying one currency by selling another currency. There is no physical buying of any goods.
- The value of the currency of one country differs from another one.
- The country with the strong economy has more value for its money than the countries which underperform in the economy.
- The values of the currencies change continuously and currencies are at war with each other for the betterment of values.
- The value of exchange depends on the stronger or weaker values of the currencies at the time of purchase.
- There is no need to watch currencies of all the countries and watching prize movement of the major currencies is enough.
- When compared with the stock market, there is no need for continuous learning about the newly listed companies.
- Picking the right currency pairs and watching it closely is enough in forex trading.
- As there is no need to worry about the 1000s of companies as you do in the stock market, this is very much suitable for the people who want to start forex trading from home.
The Currency Market
- As it is international, it is the biggest financial market in the world.
- The largest banks, giant corporations, governments and central banks play the major role in the market. The big banks determine the exchange rate and speculators who look for money also play their part.
- It’s 200 times bigger than the stock market and handles about $ 5 trillion per day.
- Forex trading occurs not in a physical location and it is called as Over The Counter market.
- It is a 24 hours market and works five days in a week.
- London, Tokyo, New York and Singapore are important trading locations and the start and end of the trading hours are the important trading sessions.
- Currencies of some major countries constitute more than 90% of the trade and the pairs of these countries are known as major pairs.
- EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD and USD/CAD are the major currency pairs.
- Currency pairs that don’t contain US dollar are called ‘Crosses’.
- ‘Currency Pairs’ which include the currency of an emerging economy are known as exotic pairs.
- As it is international and vast, no individual can influence the market as it happened many times in stock markets
The Forex Terminologies
QUOTE: In Forex, currencies are always quoted in pairs, like EUR/USD, CAD/USD. It is known as the quote and the currency on the left side of the slash is the base currency and the one on the right side is the quote currency.
PIP: Pip is the basic unit of measurement in Forex.
The forex trader should know about pip as it is a basic unit of measurement. In a trading session, if the value of EUR/USD moves from 1.2229to 1.2230, the rising of 0.0001 value USD is one PIP.
BID: The bid is the price which is best for the brokers to buy the base currency in exchange for the quote currency.
ASK: The Ask price is the best available price to sell the base currency in the market in an exchange for the quote currency. Ask price is also known as Offer Price.
LONG: When the buyer waits to see the rise in the price of the base currency, he would buy it when the price starts to rise. The buying of the base currency to sell it for a still higher price is known as going long.
SHORT: Selling the base currency when the price starts to fall, in view of buying at a still lower price is known as going short.
LOT: Lot denotes a size of the unit in which currency trading occurs in forex. The standard size is 100,000 units and for the convenience of trading mini, micro and nano lots are available.
MARGIN: Setting aside a minimum amount as a deposit with the broker is known as margin. It varies with the currency pair you choose, its price and the lot size.
LEVERAGE: It is a facility offered by the brokers to trade a position of a larger amount with the certain amount taken as margin. It helps the trader to take risks if he is sure about the profits and wants to take a position.
The Safeguards: You have to know about market order, pending order, sell stop, buy stop, sell limit, buy limit, stop loss and take profit.
These are all real safeguards and when you use it properly, they guard you like airbags which open in milliseconds in case of accidents.
Though a lot of national and international factors affect the price movements of the forex market, a lot of analysis and tools are available to guide you. The continuous and unexpected movements are the nature of the electrifying forex market and making profits by knowing the market is the real game. Tons of materials and guides are available and it is perfectly all right to start forex trading from home.
The Advantages of the forex trading
- The market is enormous in size. The price movement is quick and the market is highly volatile. What makes the forex more attractive is this liquidity. Initially, you can practice trading by using the demo account, which exactly resembles the actual trading. You won’t lose your money and will know the trading by yourself.
- A lot of free stuff is available online to learn the trade.
- As it is international and huge, no one can influence the market. It is free of manipulations.
- It’s a 24-hour market and the market never sleeps. No need to wait for the starting bell as in stock trading.
- The transaction cost is low and the retail transaction cost is less than 0.1% under normal market conditions.
- No fixed lot size is required to start or do the trading. Very small amount of money is enough to start the trading.
- The absence of commissions and middlemen in Forex Trading is a worthy factor to be appreciated.
- Leverage helps the trader to keep the risk capital to a minimum level and at the same time, he can make nice profits also.
- You should accept the fact that Forex is not a ‘get rich quick’ scheme. Only patience and practice pave the way to success
- Don’t meddle with your real currency and using one or two free demo accounts before involving real money is the right way to start trading.
- Analyze the news feeds related to Forex. It would help in a better way.
- You should develop a good trading practice. Patience and steadfast personality are the winning traits in the Forex market
- Keep a record of all things as your own journal. It is a good trading practice, which many successful traders do.
- Initially, it would be good for you to concentrate on one major pair only.
- Read 10 Tips to Build An Effective Forex Trading Plan to know more.
- Now let us conclude
- Observation, learning, patience, practice and decision making are the inherent qualities which make good forex trader.
- Acquiring these qualities doesn’t warrant any professional setup.