There are many areas to invest in and a number of people weary of conventional investment means try out Forex. It denotes foreign exchange but the actual meaning is foreign currency trading and exchange. Foreign exchange is basically the act of altering currency of one country with that of another. It is done mostly for commerce or tourism. This is required on a global level which has resulted in prevalence of forex trading. The foreign exchange market is deemed as the largest financial market of the world with over $4 trillion traded on an average every day. It is comprised of top commercial companies, banks, investment firms, retail investors and several hedge funds.
Ways to invest in forex
Before you learn the nuances of Forex for beginners it is important to learn the ways to invest in Forex. The ways are:
- The 24-hour cash market called Forex market.
- Future contracts on currencies.
- Exchange traded funds.
- Foreign currency CDs
- Foreign currency options.
- Mutual funds investing in foreign govt bonds.
Finding a trading platform
Whether you are new to Forex or want to gain expertise in trading foreign currencies after learning the basics, it is necessary to find a suitable platform. A forex trading platform is a software application that acts as an interface between the individual trader and the Forex market. It can be locally installed software or it may have a web based GUI- that is basically browser based. The latter type is more convenient to use.
Choosing the right Forex trading platform
There are a few factors that you have to analyze before zeroing in on a Forex trading platform. These include:
- Cost- A number of Forex trading software or platforms is free but there are paid ones that come with more features and enhanced customizability. Advanced Forex investors prefer the latter type of software.
- Flexibility- If you use more than one type of web access devices and PCs, it is better to pick a platform independent or browser based Forex application.
- Ease of use- You may need time to master nuances of Forex trading applications. However, user friendly software is always desirable over those with stiff learning curve.
- Infographic- The trading software should have inbuilt ways to analyze data and resources required for investing in foreign currencies.
- Try before buy- Most Forex brokers let the customers try a demo account before buying a Forex trading platform. Once you try a platform in demo mode you can figure out its suitability for trading needs.
Of course, you can read online reviews and comparisons of these trading platforms before picking one.
Proven advantages of Forex trading
Before you start trading in foreign currencies and gain insight on Forex for beginners, you should learn the advantages well. The major advantages include its 24×7 availability, flexibility of trading, options to choose from numerous currencies of the world etc. However, it is always prudent to consider the choices and start on small scale.