2 Important Points Before Investing Forex
The Forex market is an attractive market, which is open 24 hours a billion dollars every time. In the forex market achieving unlimited profits can be very happening, but even losing in seconds is also often experienced by forex traders. From that, Forex is known as an unforgiving market, where profits and losses occur at any time. Only traders who know well about forex will really survive in this famous “cruel” market.
Isn’t that very interesting? Where profits and losses can occur in a matter of seconds. But before you pursue forex investment, you need to re-setup your mindset. Of course wealth will not come in an instant without any reason. The big and consistent profits in the forex market are of course also based on knowledge and qualified knowledge about forex trading.
Many forex traders are arguably still not qualified to jump directly on real forex. They are determined to deposit large amounts of funds and eventually go bankrupt in a matter of months. Noted, only about less than 40% of traders can survive consistently in this forex trading. Before you really understand well about Forex Trading, it would be nice to know the ins and outs of Forex Trading investments.
So you are ready to start to become one of the successful forex traders? Before you start jumping in real forex trading, you need to ask yourself about the following two basic questions:
- What makes the price of a currency change?
- How do I benefit from changes in the price of the currency?
These two questions are the most basic questions when you know Forex. Let’s discuss them one by one
What makes the price of a currency?
One important point of the success of becoming a Forex Trader is that traders understand why currencies move randomly. Once you can understand why the price changes, you can expand to predict where the price will move. And once again, when you can predict what causes currency values to change, you can be called Real Forex Trader.
What moves the price of the currency.
This point is the most important one where the fundamental power of supply and demand causes the price of the currency to move. There are also global factors that affect both things. This point should be the basis of your mindset as a forex trader.
Who controls the value of the currency.
Once you understand what moves the price of the currency, it’s time for you to start knowing about who moves that price. Although it looks simple, but in the forex market consists of various actors with their respective goals.
- The banks are ‘fusing’ money suddenly
- emotional traders who are greedy and frightened
- speculators who seek profits instantly and only leave marks visible on the shadow / tail candlestick.
When you understand their nature, goals and motivations, it will be easier for you to place an order transaction correctly.
Characteristics of each currency.
Although transacted in pairs, each currency has distinctive characteristics and characters from each other. Every country has its own policies and ways to maintain the stability of the value of their currencies, as well as the factors that affect the value of the currency are also different, almost not all are the same. It is very important for you to understand the character of each currency.
How currency values can react to an economic report and news.
Economic reports and news are one of the triggers and drivers of exchange rates in the forex market. There is no way to predict when an economic news can have a direct effect on the value of a currency. But understanding how the tendency of currency reactions to an economic agenda can give you insight before entering the market.
Forex Indicators that you must understand
Luckily for forex traders because now there are a myriad of indicators that can be used as a cue about currency movements. There are indicators that really show market forces that move prices. There are also several indicators that calculate the data that has been recorded in a trading platform. Although not 100% the indicator can provide a valid signal. It is more useful than no data that can help in reading price changes.
How to benefit from price changes?
Once you have a view of what makes the currency move, you can start investing to make a profit.
Where you can invest funds
Back when people wanted to invest in the Forex market, people had to go to a bank to exchange money traditionally. At this time, you only have to choose one of the right forex brokers and then trade transactions easily and practically. The forex broker is able to buy and sell currencies, transact stocks, commodities (gold, silver and oil) and other futures trading. You must be observant and really choose a broker broker that is right for the place to invest.
There are two types of types at this point, namely long term or short term. Today there are many forex traders who choose short-term trading. This is believed to be faster in seeking profits, one of them with the help of high leverage. The nature of the open position and closing it in a period of less than a few days is the most popular choice. But behind that you need to be careful, because short-term investments also have risks if you do not observe them.
For traders who have a vision and mission to seek profits in a short term, maybe long-term investment is not too attractive. However, long-term investments can give you more peace in playing the funds you have. Besides you don’t have to worry about the loss of pips which is only less than 100 points, you also don’t need to worry about price movements. However, long-term investment requires carefulness and accuracy in every position. On the other hand, long-term investment also requires funds that can be considered quite large. In order for funds to be able to withstand price movements that occur in every movement of a currency pair.
How to protect funds in forex investments.
Understanding the scheme and how the forex market works can help you in the trap of reaction to price movements. In addition, managing and managing capital funds with the knowledge of ‘Money Management’ is very necessary for you to do.