A lot of traders lose money because they take on too much risk and can't exit quickly.
With its high levels of leverage, forex trading has developed a negative reputation for promoting risky trades.
Most individuals fail at trading for a number of reasons, including a lack of knowledge and a lack of awareness of the hazards. Increase the leverage to at least 500:1, and the losses will swiftly increase.
Market analyst Shaun Murison of IG Markets South Africa explains that stringent rules have led brokers to limit leverage to about 30:1 in well-regulated nations, reducing the risk of a wipeout.
With more fair leverage, we've seen a noticeable increase in our customers' trading performance. But at the same time, we've spent extensively in teaching our clients about the foundations of ethical trading. For example, knowing how much to risk in a trade and waiting for a good trading set-up are two examples of this.
"Those who lose money in trading do so because they take on too much risk in a single deal and fail to get out of it when things go wrong."
Because the Forex market trades an estimated $6.5 billion a day, and because online brokers like IG Markets are available for trading from Sunday midnight to Friday evening, it is becoming more popular.
Since the inter-bank market is where the majority of currency transactions take place, there is no official FX exchange like the JSE. This interbank market is scoured by brokers in search of the best deals, which they subsequently pass along to their customers. Contract for difference, or CFD, purchases at IG Markets do not offer customers ownership of the underlying currency pair they are tracking, but rather follow the price movement.
Currency pairings with the most market depth and liquidity, such the US dollar-euro, are favoured. In other words, you can open and close a transaction at the press of a button.
Forex trading has several advantages.
1.There is no limit to the number of ways you may trade a currency pair. It is far easier and less expensive to benefit from currency changes in either direction, which is a big draw for traders.
2.Forex is a 24-hour, five-day-a-week, extremely liquid market.
3.Ability to mitigate currency risk. As an importer buying a shipment of products that will not reach in the nation for some time, an unfavorable change in the currency might affect your earnings while you wait for them to arrive.. CFDs may be used to mitigate such dangers.
4.Forex trading is growing more popular in Africa, where weak national currencies are a constant threat to investors.
5.As a commodities play, forex may also be lucrative. It has been established that the US dollar versus the Canadian dollar (USD-CAD) has an inverse connection with crude oil.
6.Certain currency combinations, such as the British pound versus the Japanese yen, are famously volatile (GBP-YEN). Traders, especially scalpers (those aiming for immediate profits) and swing traders (those hoping for long-term gains), deliberately seek for volatile currency pairings (those looking to ride out a trade for a longer period lasting perhaps days or even weeks).
According to Murison, "Forex is excellent for folks looking at more short-term trading tactics rather than long-term trading."
"Traders adopt a wide range of trading tactics. Shorting a currency pair when it hits the apex of its trading range and going long at the bottom are two strategies that some traders use. As long as traders don't put too much money on the line, this strategy may be highly effective.
In our free educational material, we describe several of the most frequent tactics. The market may be influenced by news releases, thus we have daily and weekly webinars with market professionals to discuss what is going on in the market. In order to help our customers prepare for these transitions, we explain to them how to do so."
1.The cost that was utilized
Because IG Markets does not charge commissions, the firm derives its revenue from the gap between the bid and the offer price (also called the bid-ask, or buy-sell). When purchasing or selling a currency pair, two prices are presented on the screen. When you purchase a currency pair, you will pay the greater of the two values, and when you sell, you will get the lesser of the two values as a payment.
When it comes to the bid-offer spread, the size of the gap will vary depending on the amount of liquidity available in the market. However, the USD-EUR pair often has the lowest spread, with a difference as low as 0.6 pips (or 60 cents if you are trading $1 per pip).
Pips are the smallest increase in price between two currency pairings and are used to quote currency pairs. It is an abbreviation for '% in price,' and most currency pairings are priced to four decimal places, therefore a pip represents one-hundredth of a percentage point in the currency market (0.0001).
The difference between it and the current price is insignificant, but when you factor in leverage of 30:1, even modest price swings may suddenly turn in your favor – or back in your favor.
If you keep a forex trade overnight, you will incur an extra financing fee, which, although tiny, might build up over time if you hold a position for many weeks. The financing fee is the difference between the interest rates that apply to the two currencies at the time of the transaction. If we take the EUR-USD position with a value of $1000, an overnight fee of around $0.25 would be imposed on the position.
2.A free account(demo account)
Start by opening a demo account with IG Markets. Then read up on the instructional material on their website and try out different tactics to see what works best for you. You may fund your account and begin live trading as soon as you're ready. An extensive collection of educational resources is available on the website of IG Markets, including weekly webinars by seasoned market analysts from across the world.
As an IG Markets South Africa subsidiary, IG Markets South Africa is regulated by the Financial Sector Conduct Authority (in South Africa) as an OTC derivatives provider and an accredited financial service provider (FSP No 41393). Its tens of thousands of South African customers are well-served by the company's Sandton branch. A majority of the company's board of directors and key executives are South Africans, making it an authentically South African organization. It is happy to be a part of South Africa's developing financial services sector as one of the largest employers in the online broking area.
Note: CFD losses might outweigh deposits.
IG Markets is part of the £3.4 billion IG Group listed on the LSE (R71.4 billion). It has about 330 000 active users globally.