Do you know how you feel when somebody introduces you to something that makes your risk appetite skyrocket? Well that was exactly what happened to me when my very close friend, Smith, introduced me to foreign exchange trade.
I was so awed about the enormous financial gains that laid in this form of trading and to cap it all, I could do it from the comfort of my room with my personal computer and of course— with an internet connection!
I can still vividly recollect the first-day I traded, not with a dummy account but with my hard-earned dollars, and guess what happened to my dollars? Bet you thought I quadrupled my money but reality hurts, I lost it all.
Looking back, I realized it could have turned out differently for me if only if I learn how to trade with a mentor. But you or anyone should not have to make the same mistake I made not now or ever.
For those who have experience trading in foreign exchange, you already know what i mean but for those who don’t make use of it, you are missing on a whole lot and for those who don’t have the tiniest idea on what forex trading implies, sit back and relax while I introduce you.
What is Forex Trading?
According to Investopedia, Forex is a portmanteau of foreign currency and exchange. Foreign exchange is the process of changing one currency into another currency. Usually, forex market participants usually engage in the forex market to hedge against currency or interest rate risk.
This is very common for businesses that engage in foreign transactions with other countries. For example, imagine you have a business in Switzerland and you need to import raw materials from the USA, it would be highly impossible to make payments in the swiss franc, rather you will need to exchange your swiss franc for the US dollar equivalent.
Now that you know what forex trading is all about, it is safe to delve into where forex trading occurs. Read on to find out.
What is the Forex Market?
The forex market is where currencies are traded. A currency regarded as legal tender in one country is not treated as such in another country but we find ourselves in a global village where our lives are interdependent, so we all need to exchange currencies to make our life so much easier.
One peculiar thing about the Forex market is there is no centralized market for trading currencies, rather currency trading is conducted electronically over-the-counter (OTC). (You probably are wondering what OTC means? OTC simply means foreign exchange transactions occur directly between participants without a central exchange or middle man.
The forex market is active 24 hours daily, five and a half days a week. The major centers where currency trading includes London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney—across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market is open at any time of the day.
Now that you have a succinct overview of what goes on in the forex market, let’s jump into the reasons why you should learn how to trade forex.
Why you should learn how to trade forex.
It is beneficial for you to learn how to trade forex for the following reasons:
- Forex trading is a path to securing financial freedom: once you have mastered the art of forex trading, you will be able to make more money but i must confess that it may be difficult at the start but with consistency and patience, you will pull through!
- It is efficient in hedging against risk: through forex trading, companies and individuals alike are able to avoid the burden that comes with their home currency depreciating against another country’s currency.
Remember I lost all my money in my first attempt at forex trading, all because I felt I could do it without proper guidance so if there would be any takeaway that I want you to forever hold dear. It is for you to learn how to trade with a mentor.