Are you looking for a safe broker to invest in forex at South Africa? Ubanker offers you this page with everything you need to know to choose a reliable broker. If you want to know which is the best rated forex broker in our test, we opt for Ubanker Nigeria. Want more options to choose from? Below these lines we publish a table with the best forex brokers in Nigeria.
Investing in forex is undoubtedly one of the forms of investment that can provide more benefits in the medium term. Therefore, more and more traders and individuals are interested in this type of financial product. Unfortunately, this has also had its negative consequences, generally associated with the emergence of fraudulent platforms that engage in scams. The truth is that it is not always easy to distinguish reliable platforms from those that are not. From Ubanker, a portal that was born as a solution to the arduous task of distinguishing those safe and fraudulent options, we bring you a complete guide with the best online brokers of 2018 so that you do not play it in any of your transactions.
Next, we explain the criteria and factors in which we look to make the table and decide when we can be calm and think that a forex broker is not a scam. We hope that, not only can you value our opinions, but you can also compose yours and decide for yourself.
What is investing in forex?
If you like to read press and blogs about investments and economics, surely you have found many times with the term forex. In this case it is not a new investment instrument. On the contrary, it is a well-known type of investment for many years, but that for a while this part is beginning to be called with this acronym in English. Its literal meaning is foreign exchange and simply refers to foreign exchange investment.
The investment methodology is not very different from the one carried out with the actions. There are defenders of the fundamental analysis, in which the productive situation of the country or entity in charge of producing the currency in question should be taken into account and there are defenders of the technical analysis , which in regard to the investment in forex seems to be the one that It is imposing. Undoubtedly, in this predominant trend of technical analysis, it has a lot to do with the fact that investment in forex is generally contemplated in a shorter term than investment in shares, although in reality nothing forces it.
What is a currency pair?
One of the main peculiarities of foreign exchange investment is that it is always invested in relation to two underlying. That is why we usually talk about currency pairs. A currency pair is nothing more than the relationship between the prices of two currencies. The notation is very simple. Generally, the two currencies separated by a slash are indicated, so that the first currency is the base and the second the quoted currency. If, for example, the EUR / USD is trading at 1.05, it will mean that we need US $ 1.05 to buy a euro.
Currency names were standardized using ISO 4217 so that a currency is expressed in three capital letters, the first two letters being the beginning of the name of the country and the third letter being the first letter of the name of the currency. Thus, for example, JPY is the name of the Japanese yen and USD the name of the US dollar.
From there the investment mechanics is very simple. If you think that the dollar is going to gain value with respect to the euro you will have to buy dollars, while if you think you are going to lose it you will have to sell it. Therefore, in the forex market there is not really the concept of a bull or bear market, since one currency always goes up or down with respect to another, so the movements will always be inverse. In this way there will always be good investment opportunities in the market, regardless of the time of the economic cycle. Of course, the crux of the matter is knowing how to identify trends, in order to take advantage of them. Always keep in mind that, when investing in currencies, volatility is quite high and the forex also refers to leveraged products.
What advantages does trade in forex have?
As with binary options and CFDs, investment in currencies is very attractive due to the great potential for profitability. No doubt a high potential return has a high risk associated, but forex investors continue to increase, because the risk can be easily managed with stops, diversification and good pre-investment analysis.
It is a market that always has some opportunity. There is always some currency that is about to rise or fall in a high proportion to another.
It allows operating up and down, which means that the risk coverage possibilities are also important if you invest in other types of assets.
It is a market that is active 24 hours. Unlike the exchanges, whose markets have a few hours of opening and closing, currencies are always active.
Low commissions. Unlike the commissions to invest in stocks and ETFs, in forex the price of the operation is only the spread between the purchase price and the sale price.
Basics about forex
The first time an investor is willing to trade forex, he has to face a specific nomenclature. It's not very difficult, but at first it can be confusing. Here we present a small summary of concepts that you will find when you are ready to invest in currency pairs.
Pip
Put simply, a pip is the minimum part of a currency that can undergo a variation. The price of currencies is very sensitive and in financial markets it is not limited to the two decimals we are used to use on a day-to-day basis. As regards investment, one euro with fifty cents instead of writing like this: 1.50, it would be written like this: 1.5000. The quantitative difference is nothing, but to invest it does make a big difference, since the variation of that fourth decimal can be a lot of money. The pip is precisely that last decimal that is taken into account when investing. That is, if the euro goes down to 1.4800 it will have experienced a drop of 200 pips.
Leverage
Leverage refers to the possibility of operating with a large amount of money buying or selling simply the option of purchase or sale that interests us. In this way we manage to operate with more money than we really have. If for example you use a 1: 100 leverage, with € 1000 you will be operating with € 100,000. So if the price of the currency goes up 3% you will earn € 3,000 something that for an investment of € 1000 is not bad. The negative part is that if it falls, the losses move in the same proportion.
Lot
It is the smallest transaction size allowed by the forex broker. If for example an FX broker operates with lots of 1000 units, this will be the minimum number of monetary units of a given currency with which you can operate your customers.
Spread
It simply refers to the difference between purchase and sale prices in the market.
conclusion
The investment in forex is tremendously interesting, both for the vibrant variations and for the great returns that can be obtained. However, the excitement should be restricted to the investment itself, and there should never be uncertainty about whether the broker is going to refund your money or not. Therefore, one must be careful with the fraudulent web pages that appear every day on the hunt for trusted investors. Making a good analysis of the security and offer of the broker is the basis for making a good decision. Therefore, in Ubanker we have carried out reviews and in-depth analysis of a large number of brokers. In the table at the top of this page you have the best FX brokers and in the right column you can see all the reviews available.
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