What Are The Basics Of The Forex Market?
Knowing what Forex is and how it works is not enough to be successful, you also need to know what is profitable in Forex, and when it is profitable.
Forex Trading requires a certain amount of individual effort, especially for those who are first time in traditional markets. If you are a novice, you should know that you can make calculated trading with the help of automated trading software.
A well-known software in Forex trading is called MetaTrader4, which is used all over the world.
In contrast, in manual trading, financial market traders trade mainly in the short term, through a series of fundamental indicators and technical indicators.
As we said at the beginning of today’s article, learning what Forex is not everything. To be successful in the financial markets you need to understand some basic rules that we call fundamentals.
The First Rule To Follow In Forex, Fundamentals
When you trade currencies, you are trading with leverage, because currencies do not vary in percentages like stocks or options.
From here we can introduce a fundamental concept, leverage. Leverage is money borrowed from the broker, that is, an amount of money corresponds to an increase in leverage potential. The leverage increase potential depends on the account settings.
Leverage has a cost called margin.
Your margin is the amount of money required for a given trade. This means that whatever form of mistake you make, you pay.
For this reason the leverage can be a double-edged blade, you can earn a lot of money by borrowing money, but you can lose a lot of money by borrowing money.
For this reason, when you are trading Forex, you need to understand exactly how it works, especially in terms of leverage and margin.
Skills For A Successful Trader
Markets can move in a very strange way, which means that they can move in an “inverted” way, i.e. the real movements are the opposite of the forecasts.
The skill of the trader lies in his ability to:
- Recognize changing market conditions, which means the ability to see in the present what will happen in the future.
- Wisdom in decision making.
- Possessing knowledge.
- The logic of decision making.
- To implement proper portfolio diversification.