Looking to start your forex trading journey in South Africa? Blackstone Futures has you covered with this quick introductory guide to the forex market.
The foreign exchange or forex market is the largest and most liquid market in the world, with trillions of dollars changing hands each and every day.
Before starting out on your forex trading journey, it’s important to get a little background on the knowledge on the market and how it all works.
The forex market was previously the sole domain of institutions and high-net-worth individuals, but the internet has changed all that. The internet has been a disruptive force in many industries and the forex industry is no different.
These days, anyone with a small amount of investment capital, a humble Android phone and a 3G internet connection can get started with forex trading.
Getting Started with Forex Trading
How the Forex market works
Unlike local stock markets, the global forex market is open 24 hours a day, 5 days a week. This makes it much easier for anyone, anywhere on the planet to capitalise on trading opportunities, as the market is always open and always moving.
You as a forex trader have to analyse the market and speculate as to whether the price of a given currency will rise or fall against another. If you think the Rand will fall against the US Dollar, you buy USDZAR, if you think the Rand is likely to strengthen against the US Dollar as emerging markets are doing well, you might sell or short USDZAR.
Though there is an abundance of opportunities in the forex market, it is not a place where you get rich quick and if you acknowledge this from the outset, you will likely have a much more pleasant journey to eventual success and financial freedom. Though you only need a few hundred dollars to open an account, if you’re serious about trading forex as a career, once you are confident with your trading abilities, you will have to deposit enough capital to make professional trading possible.
Educate yourself about Forex
A sound education about forex is key to success on your forex trading journey.
The good thing is there is a wealth of free educational content about forex all over the internet and here at Blackstone Futures. Educating yourself for free now will be infinitely cheaper than learning the hard way in the markets and with just a few hours of study each week combined with practical experience, in a year’s time you’ll know more about trading than your average economics graduate.
Some topics you may want to research include general articles about the forex industry, key terms, and phrases, articles regarding selecting a broker, and broker reviews. You will also want to research profitable trading strategies, sound risk management and start building up some hours on the charts.
Forex jargon
All professions and hobbies have terms and phrases that are unique to that pursuit – the talk of the trade.
This can seem daunting at first, but nothing in forex is overly complex and with a bit of light reading and interacting with other traders, you will have the hang of it in no time.
Here’s a brief list of terms you may want to familiarize yourself with right away before placing a live trade:
Researching each of these will open up more doors for you and you will know all about forex trading in no time.
Broker reviews and selecting a broker
Forex brokers are a dime a dozen on the internet these days, though this gives you a lot of choices, it doesn’t make finding a good broker any easier.
You might want to consider the jurisdiction of the broker and whether they are based locally or in another country. For example, if you are forex trading in South Africa, you likely want to trade with a South African broker.
This will not only make your deposit and withdrawal processes and customer service experience much easier, but you will also be able to rest safely at night knowing you have local avenues for complaint if you feel your broker has not dealt with you fairly.
Forex reviews are a great way of checking out what a broker’s clients think of them. As with anything on the internet, you should always take what you read with a grain of salt, but generally speaking, if a broker treats their clients well, this is going to show in the form of positive reviews and vice versa
Trading strategy and risk management
Would a great general go into battle without a strategy?
Each and every time you open a trade you’re doing battle with the market and you should have a strategy in place accordingly.
The strategy you choose will come down to your available balance, risk tolerance, and the amount of hours you want to dedicate to trading amongst other things, but here are some general trading strategies that you should research further:
- Scalping: Ultra short term trading
- Swing trading: Capitalising on larger intraday movements
- Trend following: A longer-term approach, riding big multi-week or multi-month trends
Whatever strategy you choose to pursue, sound risk management should definitely be a part of it. Generally speaking, you should never risk more than 2% of your account on any one trade and you should always have a stop loss on your trades to protect you when you are wrong.
Getting trades wrong is a part of profitable trading, making sure you don’t lose too much money when this happens is risk management.
Clock some forex chart time
Like any pursuit, forex trading takes time to master.
Traders love making money, but we also love the journey – the constant need and desire to improve. The only way to become a true forex master is to start clocking time in front of the charts and your trading terminal.
If you’re willing to put in that time, every day you look at the market it will make a little more sense, and one day it may even seem simple.
Open a live forex trading account with Blackstone Futures today
Ready to start clocking some serious time in front of your charts?
Open a live trading account with Blackstone Futures today and start your forex trading journey on the right foot.
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