Author: Abhishek Agarwal
If you notice, education in any stream follows a certain pattern. A person wishing to become a doctor has to attend regular classes at a medical college, pass state licensure exams, and finally get a license approved for practice. So also with a person wishing to become a lawyer, a businessman, and so on. Now, if you have developed the desire to indulge in currency trading, you need not go to any college/school, but get counsel from an expert on how to go about the business.
To help you out, here are some “dos” and “donts” of currency trading, and why you should be cautious while going into business for yourself–
(1) As an option for investment, currency trading is definitely worth it. There are people who have accumulated a fortune in thousands, and sometimes even in millions! But they did not just jump headlong into the business! They did take time to grasp the basics and play the game with caution, before they finally achieved success.
(2) If you want to emulate their success, you have to enhance your own knowledge about the basics of this type of trade. These basics include–your duties and responsibilities regarding your employees, how to secure the necessary permits and other noteworthy factors. They should help you figure out what you should do regarding your business.
(3) Trade is a game of profits and losses, but you can neither be too cautious nor too foolhardy. Start with short-term goals and do not go for long-term success immediately. Develop a realistic attitude towards winning and losing.
(4) Currency trading is considered a high-revenue return market. But there are certain variables/factors that can have an impact on the business. How will you face such unexpected situations unless you are prepared for them? It is like committing suicide! So proceed with caution always.
(5) Coming to the actualities of the business, it is important for you to understand how the process works. As a trader or investor, you need to buy foreign currencies (as a pair) first. Then, sell them as a pair to other currency investors or traders.
This transaction takes place within the boundary of a pre-determined foreign exchange rate. This rate acts as a comparison between a pair of currencies, plus decide what is their actual market price from the other pair of currencies.
(6) You may wonder if currency trading also has a demand and supply pattern, like other kinds of trade? Yes, it has!
As a matter of fact, it is an economic law that governs the direction in which the price of a particular commodity or service moves in the market. For instance, if there is a high demand for a certain commodity but the product itself is in short supply, its price is bound to rise. In contrast, if the demand of that commodity has come down and there is excess supply, its price is bound to come down.
Similarly, if the supply is less and the demand is more, the market value of currencies will shoot up! And if there is more supply but less demand, the reverse is going to happen!
(7) So it is “demand” that will decide how a particular foreign currency will “proceed” in the future. The variables that could have an impact on this rise and fall in value include–gross domestic product percentage or GDP, and the current business trends in the market.
(8) There is no fixed currency exchange rate as of now. Hence, neither you nor anybody else can predict a permanency in the current foreign exchange market trends.
(9) In your haste to learn and get started in the business as soon as possible, do not fall prey to brokers who entertain you with pictures of profits just pouring in if you utilize the system that they are going to show you! There are genuine brokers too, of course! But do check out their backgrounds before you consider getting into a business partnership with any of them.
(10) There are plenty of stories about scams today, most of them centered round currency trading. Poor regulation of participants has been a primary cause. Secondly, “frauds” have gone around selling software that has proved to be totally useless, or opening accounts that will harm the investor or trader. These false brokers have ended up with millions in their pockets!
(11) Therefore, the best advice for you is to go in for expert advice where currency trading is concerned. There are professionals to be found in banks or large financial institutions, who are more than willing to help you.
About the Author
Abhishek is an expert at Online Trading and he has got some great Trading Secrets up his sleeves! Download his FREE 81 Pages Ebook, “Online Stock Trading Made Easy!” from his website http://www.Trading-Masters.com/766/index.htm . Only limited Free Copies available.