More recently, Forex trading was considered the portion of the select few, big players. But times are changing: today almost anyone can try their hand at earning on the difference in rates, and it is not necessary to have an impressive capital.
So, Forex trading is attractive, accessible and provides an opportunity to earn. So why only a few manage to “hit the jackpot” and most are permanently in the state of mixed success? Luck? Knowledge? Strategy? What do you need to trade successfully?
Of course, luck, the right strategy and knowledge are important ingredients for success. But do not forget that the Forex market is highly volatile, and the possibility of big profits is always fraught with risks. Therefore, before you start trading, you need to be prepared to take the risks, not to trade your last money, have patience and know the rules of trading on Forex.
What you need to trade on Forex successfully?
Trading assets includes trading commodities (for example, metals and oil), currencies, futures and stocks.
The main principle of Forex trading is to buy the currency at a lower price and sell it at a higher, getting profit on the difference. But, in spite of this speculative coloring, Forex is not a game of chance, it is a serious work that for many traders has become a stable source of income.
Practice and experience
If you have no experience of trading in the Forex market - this is not a problem. Everybody in good time begin with something. Therefore, in order to safely open a trading account, we recommend you to practice on a demo account first. Thus, you will have no risk of losing real money and get the opportunity to apply your knowledge in practice, understand how Forex works and choose the best strategy for you. Demo account is provided by almost all brokers. And remember, most aces of Forex are people of different professions in the past. The key to their success was their hard work, patience, willingness to learn and a belief in themselves.
CFD on stocks
As for CFD trading, if we speak the language of the financiers, the contract for difference is an agreement between the seller and the buyer of the contract on payment of the difference between the value of the contract at the time of purchase, and the value at the time of further sale.
Simply put, buying a CFD on 500 shares of Walt Disney Corporation at the price of 35.00 USD for one share, and selling it after some time at the price of 37.80 USD, the buyer of the contract (i.e., the company) undertakes to pay you the price difference, which will be 2.8 * 500 = $1400. On the other hand, if the stock price at the time of completion of the operation is lower than the purchase price, the financial obligation to pay the difference will be imposed on you.
Key benefits of CFD
Low margin requirements. The required deposit is only 10% of the real value of the contract;
Globality and ubiquity. Conducting trading operations is available from anywhere on the globe, where it is possible to connect to the Internet;
Guaranteed execution of orders. Possibility of issuing orders of any kind, for any price movement in the market;
Low commissions. Size of the fees charged for operations - 0.05%;
Diversification. Access to a wide range of financial instruments for trading.
There is no universal secret of success in forex trading, but there are basic rules of the market and a variety of tools to help carry out a competent analysis of the situation and make decisions. Applying them in your work, with time, you can gain experience and build your own investment strategy that will bring you profit.