The world might be a little strange right now, but that doesn’t mean that it stops. Global markets are still ticking by and there is money to be made. But stocks aren’t the only way you can invest money. There’s also currency.
Hold on…making money by investing in money?
Yes, it’s a thing. And it’s called forex trading.
Forex trading, or foreign exchange trading, is the act of speculating the values of currencies with one another. In forex trading you buy and sell in pairs, betting on whether one value will go up or down in relation to the other.
Trillions of dollars are traded every day in the foreign exchange market, making it a very profitable venture when done right.
Due to modern technology and accessibility to the market, forex trading has become incredibly popular and is no longer just for huge banks. If you have a computer and access to the internet then you can get involved.
You might have seen that the global economy isn’t as robust as it once was. So is now the right time to get involved?
The Time is Now
With the coronavirus pandemic, every aspect of society has taken a hit and currencies hasn’t got off lightly. However, as the market is currently low that means there might be plenty of bargains out there to invest in. Coming to the end of the year the signs are there that the global economy is starting to recover.
Forex trading is seen as a short-term option and the market is more volatile (moving up and down) more than ever. More volatility means more risk. It also means more reward.
Where to Invest
Forex trading isn’t as simple as putting your money into a slot machine. It’s a complicated world that is caught in constant change. Luckily, there are common currency pairs to trade in, with a lot of data out there on how to make the most of your investments.
The EUR/USD (Euro/US Dollar) is considered the most popular pairing around. In the market it is not too volatile, meaning there is less risk involved in the trade. Due to its popularity, there is a lot of information out there about this pairing.
GBP (British Pound Sterling) is often paired with USD. There are high profits associated with this pair but with that comes more risk. Due to the situations around Brexit and the pandemic, this pair is more volatile than ever.
Another popular option is USD/JPY (Japanese Yen). The difference between the bid (sell) and ask (buy) is usually low and follows a smooth trend when compared to other pairs.
Learning the Trade
Before you do commit any money to trades, learn the business of it. Research and study currencies, the market, risk assessment and formulate a trading strategy. There are many forex trading companies in the UK that are not only trusted brokers but also contain plenty of resources to help lessen that steep learning curve. This guide over at City Index is particularly helpful on all things forex trading.
Keeping your eye on current events that may affect the markets is also vital, as these things will affect currency prices.
You can follow up to date market data on the BBC website.
Forex trading, like all types of investment, is risky but worth your time. If you’re diving into the world of forex trading, then do so with a clear head.