Tired of trading the same old stocks, options and what-not, and looking for a new way to hopefully make some money? Then you might want to consider dipping your toes into the world of forex trading.
Forex trading or FX can seem like a foreign concept if you’ve mainly been buying stocks. There’s the misconception that you need to be some kind of maths whiz or charting geek in order to successfully trade forex. While that certainly helps, you don’t really need that level of skill to adopt a sound forex trading strategy.
So, is it worthwhile to trade forex? Well, there are definitely some potential benefits, so it’s worth it to “unconfuse” yourself and try it out. Here’s what you need to know to get started.
What is forex?
Forex, or foreign exchange trading, involves trading currencies of different countries. As you might know, the values of currencies vis-à-vis each other are always fluctuating.
For instance, if you are planning a holiday to the EU, you would have noticed that the 1 EUR = 1.43 SGD right now.
Because currencies are always fluctuating, there is the potential to make money from them. With reference to the above example, the EUR (vis-à-vis the SGD) is currently very weak compared to one year ago.
So, let’s say you had traded 1,000 EUR for SGD one year ago when the exchange rate was 1 EUR = 1.52 SGD. You would have received about 1,520 SGD, minus any fees and charges. Today, you could trade your 1,520 SGD at the current exchange rate of 1 EUR = 1.43 SGD, receiving in exchange about 1,062.93 EUR. Ta-da! Your 1,000 EUR has grown to 1,062.93 EUR.
1 year ago
1 EUR = 1.52 SGD /
1 SGD = 0.66 SGD
Exchange 1,000 EUR,
Get 1,520 SGD
1 EUR = 1.43 SGD /
1 SGD = 0.70 EUR
Exchange 1,520 SGD,
Get 1,062.93 EUR
1,062.93 – 1,000 = 62.93 EUR
Of course, this is a very simplified explanation and doesn’t take into account any commission, platform or other fees. But it shows how you can use currency fluctuations to your advantage.
In order to exchange one currency for another, forex traders trade currency pairs, some of the most popular ones being EUR/USD, USD/JPY and GBP/USD.
Currency pairs are basically price quotes. If you’re trading the currency pair EUR/USD for 1.20 it means that 1 EUR = 1.20 USD.
What benefits are there to trading Forex?
Here are a few good reasons why adding forex to your portfolio could be a good idea.
There are markets open 24 hours a day — The world is your oyster when it comes to forex trading. You are not confined to a single geographic region or time zone, and you’ll be able to find trading opportunities at any time of the day or night.
Don’t need high investment — The barriers to entry are low, with no minimum investment amounts or lot sizes imposed by markets. Your minimum investment will depend on your broker, so beginners should pick one like moomoo SG that imposes just a low minimum investment of USD50 for each FX trade.
Low cost — Fees and commissions tend to be pleasantly low for forex, which means even small trades become more profitable and the main figures you need to watch are the exchange rate fluctuations.
Leverage — Leverage or margin trading essentially involves borrowing cash from your broker in hopes of increasing your profit-making potential. More experienced traders can trade with leverage to try to supercharge their potential profits. However, be aware that this can backfire and make you lose money you don’t have!
High volatility — Volatility is a good thing when it comes to forex trading, as you make money from those fluctuations. Forex markets are considered highly volatile, which translates to constant opportunities.
Forex for newbie investors
Many people think that forex is a surefire way to lose all your money unless you’re an investing whiz. That’s not exactly a forgone conclusion!
Forex trading is actually fairly suitable for newbies due to the low initial investment required, accessibility of the forex market and low trading costs. The availability of currency pairs to trade around the clock also means that beginners can trade whenever they’re free, instead of waiting for markets to open.
As a beginner, you should read up on the various trading and risk management strategies and use a demo account to practise without the fear of losing real money. When trading in the real world, don’t let your emotions get in the way of how you execute the strategies. That “poker face” attitude wins!
Your Forex platform matters too
In order to effectively manage your risk and trades, you need a platform that equips you with the right tools to do so.
One such beginner-friendly platform is moomoo SG, one of the most popular one-stop investment platforms in Singapore. On the moomoo SG app, you can also trade stocks, ETFs, options, funds and so on…with forex trading being one of the latest additions. Plus it offers powerful tools with a user-friendly interface to boot!
Here are some of the benefits of using moomoo SG to trade forex.
Segregated client accounts — This ensures your money stays protected no matter what happens to the company.
Fast and stable trading environment — Catch split-second trading opportunities with a fast and reliable platform.
Tight ultra-thin spread — This means the cost of trading is low, so even small trades become more profitable.
Top liquidity providers — Liquidity increases the speed at which orders can be executed and lowers the risk of slippage.
Dedicated customer service — moomoo SG’s customer service personnel are always there to offer help and guidance (it’s 24/5 on trading days and 12 hours on non-trading days!).
Regulated by the Monetary Authority of Singapore (MAS) — moomoo SG has a Capital Markets Services Licence with Exempt Financial Advisor Status, having satisfied the authorities’ stringent requirements.
Hassle-free transactions, worry-free trading — Executing trades is a breeze with moomoo SG, so you can fully concentrate on figuring out the best strategies and spotting the most promising opportunities.
If you’re ready to explore the world of forex trading, one place to begin your journey is a beginner-friendly trading platform like moomoo SG. It’s both powerful and user-friendly!
How to trade forex on moomoo SG
You are required to have a moomoo SG universal account (sign up here) before you can open a forex account.
Search for a currency pair code, such as “EURUSD”, in the search box, and go to its quotes page
Tap the “Open Account” button in the bottom left corner of the page to open a forex account.
Next, transfer funds
Tap the “Trade” tab, select “Forex Account”, and go to the forex account page;
Tap the “Cash Transfer” button to access the “Cash Transfer”page.
Place your first order to open a position via the “Trade” page
Tap the “Trade” tab to access the forex account page, tap “Quick Open”, and enter a currency pair code;
Or go to the quotes page of a certain currency pair, and tap “Open” in the bottom left corner to access the “Trade” page.
You can also close a position by placing an order (Tap “Close” or “Take Profit/Stop Loss” from your forex position)
Follow these screenshots to help you along with your first forex trade:
All views expressed in the article are the independent opinions of MoneySmart Singapore. Neither moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore.
This post was written in collaboration with FUTU Singapore (FUTU SG). While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.
The post Confused About Forex But Still Want to Trade It? Here’s What You Need to Know appeared first on the MoneySmart blog.
The post Confused About Forex But Still Want to Trade It? Here’s What You Need to Know appeared first on MoneySmart.sg.
© 2009-2018 Catapult Ventures Pte Ltd. All rights reserved.