In simple terms, FOREX is the short form for ‘Foreign Exchange,’ though FOREX trading refers to an orderly exchange between a pair of two distinct currencies. These currencies may be UK British sterling pound, and US dollar; or Japanese Yen and UK British sterling pound. We trade currencies all the time, e.g. when we travel to foreign countries or buy goods on the internet from Japan or China. However, FOREX trading is the structured exchange, where the trader takes advantage of an arbitrage that exists between two currencies to make profits. It occurs globally, and it is the most active equity trading market in the world. On a given day more than $5.0 Trillion worth of currencies is traded offering ample opportunities for some phenomenal profits.
Some Basic Terminologies used in FOREX Trading:
Forex trading or FX trading can be done in more than 80 currencies. These are fiat currencies that are typically backed by their respective sovereign Governments – hence they are sovereign currencies also. Out of these about 85% of the market exchange occurs among the USD and a few other currencies, e.g. British pound, and Euro. These pairs having USD, as one of the constituent currencies are called ‘Majors,’ while the pairs that do not include USD are called, Cross Currency Pairs.’ The majors are the most liquid pairs and offer a proportionately higher degree of arbitrage to make profits. The third category constitutes exotic pairs – though they are least liquid and so used mostly by the business entities dealing in those far-out emerging economies.
What is Required to Start FX Trading?
Many of you are familiar with online trading in equity and options markets. Online FX trading is no different from online trading. Albeit, you open a forex trading account with firms like FOREX.com, AMERITRADE, or ONADA.com. A salient feature of these firms is that they allow a training account, where you can practice and hone your skills until you feel comfortable with doing the real trading. Not only that, there are FX trading courses and Institutions like Platinum Trading Institute (PTI) that provide one-on-one mentoring in FX trading.
In addition, you need a relatively fast laptop or a PC with preferably a gaming video card. It allows real-time streaming of the currency price action data and permits a rather faster execution of the trade. Successful FX trading also requires patience, consistency in the execution of trades, and experience-based knowledge. Institutional traders often keep a log of all the trades in order to weed out and learn from the losing trades.
Understanding the Foreign Currency and Global Markets:
A successful FX trader also needs to understand the impact of global events on FX currency markets. This may involve Macroeconomic forces like Government policies to micro events such as a flood and drought in a given part of the country. Furthermore, FX markets often react violently to interest rate fluctuations, announcements by FED Chair, or the EU premiere. At PTI we have developed a trading system which is updated prior to the London Open and gives you six buy and sell opportunities in a trading day. One of our core strategies is called the extreme zone trading strategy and this buying and selling levels will tell you exactly where the market could stop and reverse in 80% of the given market situations. As I have said previously as forex traders we should be opportunists and look for low-risk trades. At PTI we tend to take only thirty to forty trades in a month with a selection of the best trades done on fundamental analysis, technical analysis, and Logical Trading.
At Platinum Trading Institute (PTI), we study these factors every week and evaluate the possible impact on the currency markets. We also teach you how to analyze the world events and use them to your benefit.
Thus, at Platinum Trading Institute (PTI) our goal is not to train you to sit in front of the computer 24/7 and throw darts at the screen to make profits. On the contrary, we teach you to spend no more than a few hours a day – in a systematic manner to devise winning trades that will alter the trajectory of your life. Remember that as a well-known forex trader once said “the more you sit in front of your screen the more money you will lose. Keep track of your emotions and remember no matter what happens make your money work for you
Dr. Mehta is an innovator and a passionate financial analyst who has turned his attention now to the intricate world of Forex Trading and Crypto trading education.