When was the last time you considered how much the dollar in your pocket was worth?
You might not think it but how much our money is worth is quite complicated. It depends on its value to the cost of services and products in that country and the value of other currencies.
Currencies fluctuate a lot and by carefully timing when you trade them you can stand to make a lot of money. Nobody can predict the future but there is a lot of research you can do to maximize your profit.
Here is our guide to Forex trading for beginners.
Start By Trading Well Known Currencies
The big three currencies are the U.S Dollar (USD), the Euro (EUR) and the Great British Pound (GBP). These currencies are generally the most stable and the most predictable. It's well worth starting by trading these as there is less fluctuation.
Baring an extreme, once-in-a-generation event, it's unlikely that these currencies are going to fluctuate above or below a certain level. For example, the British Pound is always worth between $1.20 - $1.40 in U.S Dollars and in 2019 it fluctuates between $1.20 -$1.30.
Many people also trade cryptocurrencies as well.
Pay Attention to Politics and Economics
Only a major political or economic event would ever bring the value of the pound down to the same value as the dollar or the euro.
This, therefore, ensures you will never lose all of the money you invested but will never make too much either. This is how to trade Forex.
However, currencies with high inflation tend to fluctuate more, such as the Vietnamese Dong which throughout 2019 has been worth between 27,500 Dong to 30,000 Dong to the pound. Whilst this might not seem that much it can be the difference of £10 throughout trading £100.
It's important that you pay attention to political issues, such as relations between China and the U.S.
Practice Makes Perfect
Many apps allow you to practice trading Forex for free without having to invest any real money. This is a great way to figure out how to trade Forex.
Fintech companies such as Revolut and Transferwise also offer users the ability to open multiple currency bank accounts and you can transfer money interchangeably between them, doing your own Forex trading.
You can even set the balance to transfer automatically only when the currency has reached a certain level so you are more likely to make a profit. Be careful though as the rate you get can be slightly lower than the genuine rate due to markups at the weekend.
Find a Mentor You Can Trust or An Investment Partner
Foreign currency exchange can be lonely on your own. Make it fun by getting an investment partner. You can talk through your investments and decide together where and how much to invest.
You could even find a mentor who is more experienced than you to get some advice before you do your trade. Some might require you to pay them other mentors might be people you find by networking.
Forex Trading For Beginners: Practice And Network
Forex trading for beginners is also about doing your research, working hard and learning by making mistakes.
The most important thing to remember is that you are not going to be rich straight away and that the most successful Forex trading happens when the trader does their research and knows the market.
If you are interested in Forex trading and want everyone to know what you do be sure to check out or Forex clothing range by clicking here.