The term ‘forex’ is a portmanteau of ‘foreign currency exchange’. It refers to the foreign currency market, where national and regional currencies are traded against one another.
Up to US$5.1 trillion ($5,100,000,000,000) in currencies changes hands every day. This makes for a market bigger than all the stocks traded around the world. The opportunities for making a profit are just as great.
Another advantage is that it is open for trade far longer than the stock markets. Forex trade is available 24 hours a day, five and a half days of the week. That makes for additional opportunities to identify and conduct your investments.
Is Forex for You?
While there are distinct advantages to trade Forex, investors should consider their suitability for this unique market before they begin.
So, are you potentially a master forex investor or should you stay away? Here are three key characteristics of a good forex investor.
Invests time in education
Like any financial derivative, the key to forex trade is understanding the factors that affect your asset and/or investment. There is only one way to gain this knowledge: investing the time before you invest your money. Educate yourself on the who, what, where, when and why to keep yourself ahead of the curve.
One of the main reasons that individuals lose the money they invest is that they have no self-discipline. This refers to the ability to realize when to commit and when to withdraw. It can be difficult to admit that you made the wrong call on a trade but it is essential to forex trading success.
Trades within Limits
This is also related to discipline and here refers to the ability to decide when to invest and when to cut your losses. These decisions on parameters are ideally made far in advance of actually making an investment. Adherence to them is the key – compromising on your own rules is fertile ground for failure.
If you have cultivated these three key characteristics, you are well on your way to forex trading success. The last step is to work with a reliable broker like ForexTB on whom you can rely.