What You Should Know About Forex (Newbies)

While I was in school, I spent most of my time listening to my friends and a classmate talk about forex and cryptocurrency 📈. I was excited to see them make profits from the market but I had a lot of fears.

The money was evident, I constantly kept watching videos of different traders and how much they've made but that wasn't enough to push me into the market. I kept feeling I couldn't handle the emotional stress, or understand the structures and I thought I wasn't the patient type. This aside, I heard them complain about how the market isn't being favourable and how their strategy isn't working the way they wanted. So, they moved from Fibonacci to Smart money concept, this was the height for me.

But guess what? I think I'm building that confidence I need to storm the market no matter what it takes... So, if you think the Forex or crypto market is all about the money OR you have fears about the market, subsequently, I'll explain some basic things about the market.

A long time ago, our parents were involved in a form of exchange known as "trade by Barter". This form of exchange was done without the use of money. It simply involved the exchange of goods or services. People that wanted clocks and didn't have one were ready to exchange their foodstuff or clothes to get one. Sometimes, losses occurred but they couldn't stop because that was the only means of getting what they wanted.

Now, we have the Forex market. This market is where foreign exchange is being carried out and this exchange can be done in the comfort of your home. This market is run by a network of banks all around the world and it solely depends on supply and demand. As a trader, or one looking to trade, you'll have to understand what influences the market thereby causing fluctuations in price.

Below are factors that influence the market price;

• Market sentiment

• News reports

• Credit ratings

• Central bank

• Economic data

These above factors can either cause you to gain a huge amount from the market or cause you to lose all you ever saved up in the market. So you must understand how these factors work.

•Market Sentiments: This involves the overall performance of the market with respect to price movement. These sentiments are either bearish or bullish.

Being bullish simply means, the value of an asset will rise. This rise in assets can simply be called a Long(uptrend). So when you hear terms like "I’m bullish on gold" or "I’m long on gold" the trader simply believes that the price of gold will Rise and they are willing to buy the asset(pair).

Being bearish simply means the value of an asset will fall. This fall in assets can simply be called a short(downtrend). This action can cause the trader to sell an asset(pair).

Before you act on these sentiments, make sure you have a well-defined strategy.

• News reports: When an economy of a region is good, some investors tend to put in their capital and this will cause an increase in the demand for the region's currency. Once this happens, positive news will hit the market and traders can take advantage of this. Also, an increase in the supply of a currency can cause negative news to hit the market. To frequently get news updates, check out Myfxbook..

•Credit Ratings: investors are very particular about where they invest their money. Because of this, they tend to check the company's credit ratings or the country in which they want to invest in.

A company or country with a low credit rating reduces the amount an investor will be willing to invest thereby reducing the currency price. While a company or a country with a high credit rating, increases the chances of an investor buying a stock or bond and this will cause an increase in the currency price.

As a trader, it's important to keep an eye on your favourite pairs because a low exchange rate or low credit rate can affect the profit you can make from the pair.

•Economic data: this affects the price of the local currency. This data gives an insight into the country's economy and the possible action its central bank will take. Any announcement from major economies will affect economic currencies.

So as a trader, it's good you know the key economic indicators as it can change a bearish trade to a bullish trade. These economic indicators include; inflation, unemployment, growth, housing, unemployment, etc.

For more forex tips, do well to follow and tell a friend about my page ☺️