Global forex trading volumes have increased markedly during the digital age, but activity levels spiked even further during the coronavirus pandemic.
More specifically, forex trading activity increased by 300% during the Covid-19 outbreak, with traders’ accounts in developing economies such as Southeast Asia, Africa and Eastern Europe making up 60% of all new accounts.
Getting started in this market and achieving success is far easier said than done, however, so we’ve prepared a beginner’s guide to help you launch a career in the forex market.
What is Forex Trading?
In simple terms, the forex market is a decentralised and global space that allows for the exchange and trading of various currency pairs from across the globe.
This asset class is also available as a derivative and capable of being traded without requiring investors to assume ownership of the underlying instruments, creating the potential for significant and margin-based returns.
This allows for short-term speculation in the market, enabling traders to profit from price depreciations and value fluctuations in real-time.
We’ve already touched on margin, but the forex market is also renowned for offering significant leverage. This enables traders to open up positions that are disproportionately larger than their initial deposit, creating the potential for sizable gains in the process.
How Can Traders Invest in Forex?
One of the main appeals of the forex market is its liquid nature, which refers to the ease with which currency pairings (particularly those involving major currencies such as the USD, the British pound and the Australian Dollar).
There are also various investment vehicles through which you can trade forex, including a so-called “contract for difference” (CFD).
This is a popular form of derivative trading that allows you to speculate directly on rising or falling currency prices, creating opportunities to profit in both growth and depreciating markets.
You’ll be able to access CFDs through trading platforms such as Tickmill, with this type of site also enabling you to target a raft of other assets (including commodities, shares and indices) through contracts for difference.
Tips for Getting Started
Sites such as Tickmill also enable you to launch your forex trading career, initially by using a demo account to access a simulated, real-time marketplace.
Here, you can test your trading strategies without risking your hard-earned capital, usually for a period of between three and six months before transitioning to a real money account.
When you do start to trade forex for real, it’s important that you focus on starting small, before scaling your efforts in line with experience and profitability. This means focusing on one or two currency pairs as a novice trader, before branching out and incorporating new forex assets over time.
You can also look to diversify into alternative assets over time, in order to hedge against market-specific risks and create a more reliable source of profit.