You have probably heard and read accounts where Forex traders are making huge sums of money in Forex, but it can be a bit confusing trying to understand just what trading currencies means. First, let’s just stop for a moment to explain that Forex is a volatile market and although there are traders making huge sums, these traders usually aren’t new to the market. Unless they are those One-Hit-Wonders who were lucky enough to ‘bet’ on the movement of a currency pair with a guess, you will find that most active traders have taken the time to learn Forex trading strategies to get a handle on which of those strategies fit their style.
One Similarity to Binary Options
If you have ever traded in binary options, you will assume it’s quite similar. This is true to some extent because both markets have you literally ‘betting’ on movements between two underlying assets. Unfortunately, that’s where the similarity ends. Forex is a complex market and although both markets require you to analyse the two underlying assets before trading, Forex is much more complex because, as mentioned, there are various trading styles and strategies to be familiar with. If you are wondering how different Forex can be from Binary Options, it behooves you to take the time to read up on Forex as much as possible before dabbling in the market. There is great information out there to help you better understand Forex trading strategies, such as this overview from easyMarkets. It’s a good place to start.
A Simple Explanation of Forex
One thing you will learn is that you have probably already had an introduction to Forex if you have ever travelled to a foreign country. For example, if you live in Australia and travel to a Eurozone country, you will exchange Australian dollars (AUD) for Euros (EUR). These are, for all intents and purposes, Forex pairs. Forex is always traded in currency pairs and it’s all about an educated guess on which currency will gain in value and which will be devalued within a set period of time. So, yes, Forex is a bit like wagering, only it isn’t quite that simple. You need to learn to read the signs of what is happening in the world in terms of market movement in respective countries so that your guess on the valuation of currency pairs truly is an educated guess.
A Glance at Forex Strategies
Here is where you will see why it is so important to take the time to learn trading strategies before dabbling in the market – and by the way, it is always suggested that you begin slowly. That is to say, start with a dab. Forex strategies often used to have names like Bolly Band Bounce Trade, Bladerunner Trade, Forex Overlapping Fibonacci Trade, and Daily Fibonacci Pivot Trade. Does it sound like speaking a foreign language? When you are new to trading in currency pairs, you technically are speaking a new language with each pair you trade.
It is imperative that you learn what the major, minor, and exotic pairs are and then put the strategy you are most comfortable with to work for you. Start slowly and over time you will find the Forex trading strategy that best suits your level of risk and trading style. Read that overview mentioned above as a place to begin learning about this very fast-moving and exciting market. You’ll be glad you did.