When we hear of Forex, we always shy away from it, thinking that is a very daunting industry and that it’s only meant for people who are really into business. But do we really have to be intimidated by this industry? The answer of course is no, and we will get to know more about it in a few moments.
Before we delve into the advanced matters, let’s try to take a look at what it is at first. Forex stands for Foreign Exchange Market and if you’re an OFW you are already quite familiar of the concept that is used here.
Forex is basically just a fancy term for currency market. It’s just a trade of one currency to another like from Dollar to Peso, or Peso to Dollar, Euro to Dollar and so on and so forth. Each currency is designated with three letters like in the case of EUR for euro, and USD for dollar and as we have already known each currency has its equivalent value for the other currency.
Forex has become the latest trend among investors nowadays, Rappler says it is “one of the country’s fastest growing financial market” given the fact that it is seen as a more promising investment than stock market.
Knowing the basics, we also need to look at the specifics. So here’s a round-up of 4 questions about Forex that you want to be answered but is always afraid to ask.
How do I start?
The first step is to find brokers and read about their reviews. There are of course numerous brokers out there, and all you need to do is to find the right one. It’s always great to start with those trusted companies and those that have good credentials. They would tell you eventually the things you would need to prepare so you can start trading.
The second step is to get acquainted with the terms. Now don’t get all too nervous about the terms because once you get the hang of it, understanding them would be easy peasy. The most basic of course is Pip, which is referred to as the amount of change in the exchange rate, this can project how much you would gain or lose. For more terms, you can visit XE’s comprehensive list of Forex terms.
Third step is to familiarize with how the Forex operates. In every circumstance in life, we always need to know what to do, how to do things and when to do it, so the same is expected in Forex. Take your time to find out the best time to trade, consider global issues, and study how the trend works.
Why should I even consider Forex?
Forex is a very promising industry, given that you know how to control yourself and you are well equipped in understanding the game. There are more chances for you to gain as you can trade at any time of the day, unlike in stock market which starts at 9:30 am and ends at 4:00 pm. You can easily trade during your free time.
In terms of Return of investment (ROI), depending on your skills and your ability to trade, the ROI is estimated to be at around 3-7% for the first few months. So if you got some spare cash and you want to make a bit more of it, then this would be a good place to invest your money in.
How much money do I need?
The biggest misconception about trading is that you could turn your thousand bills into millions instantly, well it were that easy then there would be an influx of millionaire all over the globe. It takes time, effort, wits, skills, perseverance and a reasonable capital to be able to do really good in trading.
So, how much money are we talking about here? There are several broker companies that would let you open an account for $5 and there are others that would offer $50 dollars as your starting money. Experts say that its best if you would just stick to risking 1% of your capital for a trade, so if you’re starting off with $50 dollars, you risk $0.5 and in return get smaller pay offs. Knowing how much you would invest is basically doing basic math to see if you’re going to be happy with the projected earnings.
It’s long suggested to start off with around $3000 if you’re considering this to be your main source of income. If you however are open to just investing and letting your savings be your capital then it’s quite alright as well.
How much money will I earn and loss?
As mentioned in the later part of our discussion, the ROI would range from 3-7% for the first few months and this could improve significantly as your capital increases and as you are more at ease in trading.
Now as for your loss, this would all depend on the amount of money you will risk. We mentioned earlier that most experts suggest risking at most 1% of your total capital especially if you’re just a newbie. This would help minimize the loss that you might be able to encounter.
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