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Discover the fundamentals of currency trading online


5th Mar 2020 Managing your Money

Discover the fundamentals of currency trading online

UK residents may access the global currency market and earn profit from its changeable rates. Here is how digital trading through brokers works. 

Online Trading in the UK

The internet has given rise to numerous money-making schemes. Today, humans communicate, get entertained, do the shopping and even earn a living online. Conventional employment schemes are becoming a relic of the past. Forex does not require you to sit in a stuffy office from nine to five, which is why online trading in the UK is becoming increasingly popular. Here is how it works. 

Foreign Currency Exchange: Basics

Any British traveller faces the need to exchangepounds for other currencies. The rates are permanently in flux, affected by a host of factors. For instance, once oil prices collapse, so does the Russian rouble. Aside from crude, geopolitics, monetary policies, interest rates and many other changes sway currency values. 

A shrewd trader may gain profit by buying and selling currencies at the right time. With the assistance of a brokersuch as FXTM, this may be done from the comfort of your home. All you need is an account, a trading platform and analytical skills. 

Scope of the Market

Previously open to large institutions only, the currency marketmay now be entered by retail traders from many countries, including the UK. Forex brokers render services on different continents. Somewhere in the world, currencies are being exchanged every minute. Overall, the daily turnover reaches a whopping 5 trillion US dollars. 

Choosing the Software

Traders have a range of products to compare. Today, MetaTrader 4 and 5 remain the top picks due to their clear interface and functionality. While the earlier version is best suited to the needs of currency traders, those who wish to expand their portfolio with stocks, commodities and CFDs opt for the fifth edition.  

Both platforms are compatible with different operating systems and may be installed on smartphones as well. Just head to Google Play Store or App Store. There are thousands of genuine user reviews.

Choosing the Broker 

Aside from registering accounts, brokers provide guidance and training. All money flows to and from your account will also be conducted through the intermediary. Therefore, it is crucial to make sure the company you choose is legit. Check that it is officially licenced to operate in the United Kingdom. As Forex is popular, you may bump into scam websites in your search. 

Basic Concepts of Forex

Here are some terms forming the ABC of trading. 

1. Pairs

Currencies are traded in pairs — combinations of a base currency and quote (or counter) currency, which are separated by a slash sign — e.g., EUR/USD. Aside from such “major” pairs, there are “cross” (without USD, e.g., AUD/CHF) and “exotic” (e.g., EUR/TRY) ones.

2. Prices

The EUR/USD value shows the price of 1 Euro in US dollars (e.g., 1.08 = 1 dollar 8 cents). There are always two correlated prices — “Ask” and “Bid”. The former is used when buying the currency, while the latter applies to selling. 

3. Spreads

Any currency is always slightly cheaper for the seller than for the buyer. The difference between “Ask” and “Bid” forms the “spread”. In essence, it defines profit or loss for the traders involved in the exchange.  


Learning the Ropes

You can easily find tonnes of trading tutorials and other educational content online. Any reputable broker supplies clients with such material and ensures support. The first step for any prospective trader is getting a demo account. Here is what makes it a must. 

Although you do not have to be a financegenius, there will be trends to comprehend and follow closely. Until your analytical skills are good enough, it is best to avoid dealing with real money. Like any kind of investment, Forex trading has its own degree of risk. 

With a demo account, you may safely explore the functions of the software. Since no actual money is spent, there is neither loss nor profit to be made. It is recommended you work in the demo mode until you gain enough confidence. So play around with the functions, open and close positions, get a grasp of stop orders, and examine all the different visual aids. If you want to know more then visit here.

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