Forex Trading: A Beginners Guide Part 2 by GCG Asia Malaysia
Welcome to Part 2 of GCG Asia’s beginner’s guide to forex trading. Do check out part 1 in our previous post which covered some basics and advantages and disadvantages. In this post, we handover to GCG Asia Malaysia’s team of forex advisors delve into types of trades, how to get started, and finally, now to avoid scams. GCG Asia’s Founder and CEO Dinish feels passionate about educating the public on financial fraud, hence why Jom Kita Forex talks about it so often. Let’s get started, shall we?
First, if you want to get started on forex trading, you need to know there’s more than one type of trade. So let the GCG Asia Malaysia team kick things off by looking into the types of forex trades.
Types of Forex Trades
Due to the size of the market, the market is split up into three types of forex markets where a specific type of currency trading takes place. These are:
The Spot Market:
GCG Asia’s Malaysian affiliate Nancy Tan explains that, “The spot market is the biggest forex market and this is the place where you will discover most retail brokers.” That means people like you, readers. It’s the place where every day traders use to buy and sell currencies. The word ‘spot’ comes from the ‘on the spot’ where currency is purchased or sold at that moment. Trades are calculated using the interest or supply of the currency. In the spot market, genuine currencies are exchanged, and when an agreement is agreed upon, it is known as a “spot bargain”.
The Forward Market:
In the forward market, currencies are not exactly traded on the spot. Rather, currencies are purchased and sold over-the-counter between two parties, such as between banks or between a bank and a customer, via a swap. One currency is purchased on the spot, and the other at maturity while the other is sold. Whatever the difference is, is the gain. Common currencies traded are EU/USD, USD/JPY and GBP/USD.
The Futures Market:
GCG Asia’s Malaysian affiliate Nancy Tan explains that the forex futures market is the place where future agreements are purchased or sold, to exchange a pre-defined measure of currency at an agreed-upon cost, at a set date later on. In the futures market, contracts are done depending on the agreement’s expiration date.
Forex Trading Scams
The first thing GCG Asia Malaysia’s forex trading experts advise is for you to learn how to spot a scam. “Investors should always be aware when it comes to forex trading that forex scams are rampant so it’s best to educate yourself,” says GCG Asia’s Malaysian affiliate Nancy Tan.
First, as you will need a broker to trade forex, GCG Asia’s Malaysian team recommends always to use legit forex trading brokerages rather than dodgy platforms that promise unrealistically low fees or other sweeteners to lure you into a trap. GCG Asia Malaysia advises you, dear reader, to do some research and verify that your brokers are reputable, qualified and properly regulated.
There are a few other common red flags in the forex trading market that you should be aware of. Signal sellers are companies or persons who charge a fee to provide forex trading advice or information, often with a guarantee of making huge gains. “The forex trading scam is that no information is given or that whoever is giving so-called advice is not qualified,” explains GCG Asia Malaysian latest news writer Eddy Lim who has come across many such scams.
Another scam to beware of is the Multi Level Marketing (MLM) forex scam. GCG Asia Malaysia’s advisors tell us that this is gaining popularity in that country. The scam takes the shape of a regular MLM system where people are incentivized to recruit members to join in exchange for commissions, and required to pay a monthly fee for trading information. GCG Asia Malaysia’s news writer Eddy Lim tells us that there are a few more to take note of but these are some of the more common scams in forex trading. GCG Asia will dedicate a separate guest post on this topic in the future.
How to Start Forex Trading: GCG Asia Malaysia’s Advice
GCG Asia’s Malaysia team is of the opinion that although forex trading can be volatile there are reasons why they would recommend getting started in forex trading. “Forex trading is limited in the sense that there are a finite number of tradable currencies. With equities, there are unlimited numbers of stocks to buy with more added daily. With forex, it’s a more focussed ball game,” says GCG Asia’s Malaysian affiliate Nancy Tan.
All our friends and co-workers at the GCG Asia Malaysia office wholeheartedly recommend forex trading for several reasons. First, the market is highly liquid, being open 24-7 Monday to Friday, which makes it a lot easier to trade with foreign currencies in real-time. This means there’s ample opportunities to trade in a day, or even a week in your case, dear newbie reader. Also, adding forex trading to your portfolio increases diversification.
However, beginners should be aware that the forex market is also very volatile, which means that there’s considerable risk to trading in forex especially if you don’t have a proper strategy. Like all forms of investing, GCG Asia’s Malaysian affiliate Nancy Tan advises those who are interested in getting into forex to assess your risk tolerance and time horizon just like any investor would do before diving in.
“Evaluating your risk appetite, what is your time horizon, and what are your ultimate goals are important factors to consider before making any trade or investment. Think about whether your focus is on short- or long-term gains,” she says.
Finally, GCG Asia highly recommends that you consistently keep on reading and learning more about forex trading before diving into the world of currency trading. GCG Malaysia affiliate Nancy Tan says latest news is a must to read and from multiple news sources daily to stay abreast with what’s going on in the world since these can affect markets. Adds GCG Asia Malaysia’s latest news writer Eddy Lim, you should also follow legit forex investors, brokers and investors that have knowledge and experience on social media in order to pick their brains and see what or who they follow in the field.
That’s all for this series for beginners to forex trading. GCG Asia hopes you’ve found it useful. Until next time, happy trading.
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