Do you want to invest in forex but are at a loss on where to start? This article will serve as a mini-handbook for beginners to maneuver the world of foreign currencies. This is assuming you already know the pros and cons of forex trading and are fully decided on investing in currencies. Foreign currencies work relatively with one another. Once in Hong Kong, you meet up with friends who decide to pay for you, and you end up not spending any of the Php 5, You then exchange your HKD 1, back to pesos, and you get Php 6, back.
You just made a profit of Php Forex works in the exact same way without you having to go to another country or bank to exchange your money. You can trade forex in the convenience of your home. Online trading platforms give you the ease and convenience of buying and selling foreign currencies.
Forex trading platforms mentioned below provide you with online application forms which you will also be asked to submit together with the necessary documentary requirements which you can just email. Even depositing and withdrawing funds can be done via credit or debit card and wire transfers.
Trading forex requires time and effort to be able to come up with promising currency pairs. You need to study the markets and economies of the countries whose currencies you plan to trade. You are your own fund manager in forex; thus, in choosing currency pairs, you need to use both fundamental and technical analyses to come up with decisions that will turn a profit. As with trading stocks, fundamental analysis provides you with the information you need to pick a promising currency pair.
Staying up-to-date with news reports regarding economic and political issues will give you an idea on the value of the currency and how it will perform in the near future. An example would be the looming Fed hike. The possibility of the US Federal Reserve increasing interest rates shows that the US economy is bouncing back from the crisis.
What this means for other economies, especially those of emerging markets such as the Philippines, is that they run the risk of losing their foreign investors, who will prefer to invest in more stable markets such as the US.
We saw how this affected the Philippine peso which reached Php 47, the highest since Using fundamental analysis allows you to come up with a decision based on facts. Past performance cannot predict future performance — completely. But you can use past data as a reference for future performance. This applies for forex trading as well.
Studying the trends and patterns of currency pairs provides statistical and numerical information which are useful in picking when to trade currencies.
Technical analysis will allow you to come with a decision based on numbers. An order form pops up. What is a pip, a stop order, and a limit order? To come up with a strategic trade and avoid your losses, understand what the terms mean. Here is a simple explanation for you to be able to place an order:. These three terms will be your companions every time you buy and sell currencies. As discussed in the introductory forex article , forex is a good way to further diversify your investments.
Trading forex Foreign currencies work relatively with one another. Opening an account Online trading platforms give you the ease and convenience of buying and selling foreign currencies. Online forex trading platforms: Using fundamental analysis As with trading stocks, fundamental analysis provides you with the information you need to pick a promising currency pair.
Using technical analysis Past performance cannot predict future performance — completely. Here is a simple explanation for you to be able to place an order: Pip — the unit used in a currency quote.
It is the smallest value by which a quote can change. Stop Order — the order used to set the minimum and maximum price to buy and sell. Once the currency reaches the amount in your stop order, your order will be processed. You may have lost, but you were able to minimize your losses by placing a stop order. Limit Order — the order used to set the amount at which you are willing to buy and sell a particular currency.
Diversifying with forex As discussed in the introductory forex article , forex is a good way to further diversify your investments. Jess Diaz Wilson, Philippines. Compare and buy, in 3 easy steps. Select products and see the results. Discover for yourself the most suitable option. We have served more than 20 million people worldwide.
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