The forex market – also known as the currency market – is the biggest and most fast-paced market in the world.  The steady growth of the number of retail traders is attributed to the accessibility provided by the internet and the potential for getting big profits within days.

Although massive profits are definitely possible when you trade currencies, there’s a big chance that you may lose some or all your capital too. This is why you should take time to study how forex trading works.

Trading, by nature, is a risky venture, after all. If you’re interested in starting trading as soon as possible, here are eight things you need to know about forex.

  1. You trade currencies in pairs

You never trade one currency alone, or else, you will not be able to measure its value. If you can’t measure its value, you won’t know if it changes in value at all. You can only trade currencies in pairs. For example, when you trade EURUSD, you actually trade Euro and you measure its value in terms of U.S. Dollars.

  1. Forex trading is leveraged, most of the time

When you trade currencies, you gain money when your trade is right and lose money when it’s wrong. Sometimes, your trades can be leveraged so that you can increase the amount of money you can gain (and lose).

This is done by exposing more of your capital to risk. This way, you can gain more money when you’re right, but lose more money when you’re wrong. Some high-risk traders are more comfortable with leverage.

  1. You must never trade without a stop loss

 “Forex Trading For Women: 8 Basic Things You MUST Learn” is locked Forex Trading For Women: 8 Basic Things You MUST Learn

Currency prices fluctuate. One moment, your trade is racking your profits. Sometime after, the price movement reverses and gives you a floating loss. There’s a chance that the price will go your way again but what if it doesn’t and your floating loss increases.

You could’ve stopped the trade before everything blew up. Stop losses are made so that your trades will close immediately at a specific price so that you can limit the amount of money you’ll lose.

 

  1. Scalping will wipe out your account sooner than you think.

Scalping is executing trades that last for seconds to minutes at a high frequency. Scalping will not be as profitable as you think for two main reasons:

  1. Humans are hardwired to cut losses short when they’re wrong and prolong profits when they’re right. If both conditions are likely to happen at the same probability rate, scalp trades will almost always end with a loss cut short.
  2. When you enter a trade, you have to pay the spread, which is the service charge of your broker. This means you actually lose money for having the opportunity to gain money. Shorter trades mean less chance to break even.
  1. Swing trading and position trading are the most popular and profitable trading styles

Swing trading and position trading are trading styles that take advantage of massive price reversals and strong price trends. Currency prices don’t just go up and down in full swings within a day.

A currency follows a trend when there’s growth or decline in its country’s economy while reversals happen when a massive economic news appears suddenly. Retail traders use swing trading more while financial institutions prefer position trading. These are also the least stressful types of trading.

  1. You must trade only the money you can afford to lose.

A wise trader won’t use her life savings for forex trading. Knowing that you hinged your financial security on a risky venture will just mess with your emotions as a trader. Emotion is the number one career-killer in forex trading. Only trade money you won’t cry over.

  1. There is no secret strategy that will guarantee you profits all the time

You’ll probably encounter forex peddlers who will sell you forex robots and signals that will guarantee you profits. These products are usually fake. There is no way to guarantee profitable trades. Every trader will lose once in a while, due to the unpredictable nature of the market.

No one can tell what the market will do, but you can put yourself in a position where you can gain the most amount of money for the least amount of possible loss. Forex can be a good part of your investment strategy and it is best if you strategize forex trading along with other investment vehicles.

  1. Research shows that women trade better than men

Women are known to be emotional, but women’s performance in trading doesn’t imply this at all. Studies show that women tend to be more controlled, disciplined, and compliant with rules when they are trading. Control, discipline, and compliance with rules are the foundations of healthy and profitable forex trading.

These are just some of the things you need to know when trading currencies. Forex is can be a great venture for anyone with high-risk tolerance. Remember to study it extensively before diving into this field.

 

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Founder @ The New Savvy
Anna Haotanto is the Advisor (former CEO) of The New Savvy. She is currently the COO of ABZD Capital and the CMO of Gourmet Food Holdings, an investment firm focusing on opportunities in the global F&B industry. She is part of the founding committee of the Singapore FinTech Association and heads the Women In FinTech and Partnership Committee. Anna is the President of the Singapore Management University Women Alumni. Anna invests and sits on the board of a few startups. Anna is also part of the Singapore Chinese Chamber of Commerce & Industry Career Women’s Group executive committee. Anna’s story is featured on Millionaire Minds on Channel NewsAsia. She hosts TV shows and events, namely for Channel NewsAsia’s “The Millennial Investor” and “Challenge Tomorrow”, a FinTech documentary. Anna was awarded “Her Times Youth Award” at the Rising50 Women Empowerment Gala, organised by the Indonesian Embassy of Singapore. The award was presented by His Excellency Ngurah Swajaya. She was also awarded Founder of the Year for ASEAN Rice Bowl Startup Awards. She was also awarded the Women Empowerment Award by the Asian Business & Social Forum. Anna has been awarded LinkedIn Power Profiles for founders (2018, 2017), Tatler Gen T, The Peak’s Trailblazers under 40 and a nominee for the Women of The Future award by Aviva

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