Forex trading can be an extremely lucrative way of making money, but it can also lead to significant losses if you make the wrong trade or use an irresponsible broker.
With the ability to trade in global currencies, the Forex market gives you the opportunity to trade internationally. In addition to trading in stock markets around the world, you can make significant gains by buying and selling currencies.
With daily trades in excess of over 5 trillion US Dollars at the time of writing, the potential for making significant returns on the Forex market is alluring and appeals to experienced traders and novices alike. However, the Forex market is one of the most volatile markets you can trade on, so it’s vital you seek help from an experienced and reputable broker.
Whether you want to obtain trading advice or simply have a broker carry out trades on your behalf, using a reliable Forex broker ensures your trades will be made correctly and in a particular timeframe. In a market where seconds matter, having a broker you can rely on is essential.
Using a Forex broker when trading overseas may seem like an obvious solution, but you won’t necessarily want to use the first broker you come across. If you’re new to trading, rushing into making Forex trades could be a costly mistake. Instead, it can be beneficial and cost-effective to take a little time to find the right broker for you.
Typically, Forex trades involve two currencies, with investors trading on how they think the comparable value of the currencies will change. Suitable for long-term and short-term investments, the Forex market offers an undeniable opportunity to make large returns. Furthermore, online Forex platforms and tipsters make the trading process look simple and straightforward.
Talking about the complexity Jeffrey Cammack from TradeForexSA says: “ The main issue with large forex trading markets that are in the developing world is level of misinformation being spread by unregulated brokers. Social media advertising is able to target demographics of potential traders would are more susceptible to this advertising, and as a result there are a lot of people losing money they could not afford to lose.
The only way to combat this is to reinforce the laws that support regulatory organizations, like the FSCA in South Africa, to enable them to identify and prosecute these companies.
Of course, successfully investing in foreign currencies isn’t as simple as it might seem. As well as having a thorough understanding of the varying Forex platforms, you’ll need to have a vast knowledge of the current political, economic and environmental issues affecting the currencies you’re trading in. Anything from a snap election, an environmental disaster or a state-run commercial enterprise collapsing can cause the value of a particular currency to drop quickly.
When this happens, you could lose a significant amount of money in seconds and you won’t always have much warning of when the market will change suddenly. Being able to respond to events quickly is vital to making a good return and avoiding costly losses.
Most non-professional traders are simply unable to access a Forex platform consistently enough to respond to these incidents, nor do they have the expertise required to interpret complex trading instruments, data, and strategies, such as the exponential moving average indicator or Bollinger bands.
With a reliable Forex broker, however, you can increase accuracy and efficiency when you’re trading, thus increasing your chances of making successful trades. Whilst a Forex broker may not be able to guarantee success, their expertise and proficiency will assist you as you trade in global currencies.