Before we dive into the technicalities, you have to first know the meaning of ‘Forex’? Forex is the simplified form of Foreign Exchange market. As the name suggests, it is the place where various types of currencies are exchanged.
Most people in the world engage in Forex Trading market without even being aware of it. Currency is very important and there is a need to exchange the currencies when we want to buy a product or commodity from a country whose currencies are different from ours.
If you had opted to buy a cute pair of jeans from a website that is based on a foreign soil or needed to have your money transferred to an overseas bank account, then congratulations my friend, you have successfully taken part in the foreign exchange of currencies. Even though the technical aspects of the trade are taken care of by the bank employees, you can now boast of the fact that you have now been into the arena of Forex Trading Market.
Most people have the erroneous belief that Forex Trading Market and the Stock Market are one and the same. The same line of thought follows that the centralized Banks are the junction of both Stock Markets and Forex Markets and that the New York Stock Exchange is a financial stalwart and the largest of its kind in the world.
However, they couldn’t be any more wrong. The Forex Market is the largest financial market in the world, dwarfing even the Stock Market under its shadows. To put it into comparison, the Forex market is nearly 200 times larger than the Stock Market and makes approximately $4.9 trillion per day compared to Stock Market’s meager $2000 billion per day.
This photo finely captures the sheer size of the Forex Market compared to the Stock Market.
The advancement in technologies and the advent of e-commerce have made the Forex Market even more prominent. The constant flux of products and commodities produce the need for exchange of currencies. The internet has made Forex Trading inexplicably easier. All you need is your setup at home and an uninterrupted internet connection.
Besides the evident ease, Forex Trading has been gathering immense popularity for its viral nature. It provides the perfect opportunity to earn considerable amounts just by sitting in the comfort of your home. You can essentially bade farewell to your boring old 9 to 5 job and become the boss of your own fate. As lucrative as the ultimate goal may sound, the road leading to the destination is long and full of obstacles. Many new traders are the often the unfortunate victims of Forex Trading Failure.
Before you put up your hands in surrender and claim that you do not have the necessary qualifications to succeed as a Forex trader, just hear me out once. Forex Trading is no rocket science and you need absolutely no higher qualification to succeed in the field. You do not need to be a scholar in Mathematics or Economy or even be in tune with the current affairs and global economy to try your hand at Forex Trading and be successful at it.
A high school or college dropout is as much competition in making a good trader as a specialized professional like a doctor or professor, if not more. The Forex Market has no connection with one’s intelligence level or academic qualification neither does the success in the trade depends on it. That being said, Forex Trading is no child’s play either.
One needs to be prepared and have realistic expectations of trading when embarking on a journey to Forex trading. Becoming a good Forex Trader requires intensive emotional control. A successful Forex trader is calm and collected and does not let his rogue emotions cloud his judgment. Most amateur Forex Traders lose money because they fail to keep a check on their emotions and let them have an impact on their judgment.
A good Forex Trader must be a master strategist and be calm and collected at the same time. Most of the traders who are just starting crave to get rich overnight. While the Forex market can be a gold mine, it does not yield success in a matter of days. Ignorance towards the field, failure to grasp the details and a cocky attitude are some of the major drawbacks that lead to the downfall of new traders.
The goal of all Forex Trade is to maximize the profits with minimal risk.