So, you want to trade in the Forex market? Maybe you already do and just don’t know it. Most people think forex trading in UAE is a get-rich-quick scheme. Still, it’s a regulated way to profit by speculating on short-term price movements of currencies based on economic events, political decisions or even pure speculation. Whatever your reason for wanting to trade, there are some things you should know before starting.
The forex market explained
The forex market is a decentralized global one where dealers set their exchange rates. It often did electronically but still settled deals through brokers located everywhere from Wall Street to Singapore so that opportunities can arise anywhere. That means that anyone with access to an internet connection has the potential to trade day or night, with a massive potential market.
Many traders buy and sell currencies when they believe the market will move in a specific direction, such as after US jobs figures have just been released. Sometimes this strategy will give you an edge over other traders because there is less activity around at these times.
There are two different forex trading analyses: fundamental analysis and technical analysis. On the one hand, fundamental analysis is all about finding out what effect various events will have on currency prices based on economic reports from major players like the Federal Reserve or European Central Bank. Technical analysis looks purely at price movements and charts to work out where a currency might go. Both approaches require a certain amount of learning, but both can be equally successful.
Tasks of a Forex trader
If you are a Forex fundamental trader, your primary aim is to work out certain currencies’ underlying strengths or weaknesses based on news reports. For example, suppose there was an earthquake in Japan, and it temporarily halted production at some critical factories. In that case, you may find that the Yen dropped against other currencies because people would prefer to buy less expensive goods from Europe or America even if their quality was not as good.
A Forex fundamental trader will look at all the numbers behind this story, but many traders won’t have access to them immediately after release. Forex fundamental traders also need to know how economic events affect different countries’ economies depending on what they produce more of, i.e. the price of crude oil might affect Saudi Arabia more than Japan if Japan imports all its oil, or it may have the opposite effect because Japan’s economy is more robust. Forex technical traders focus solely on price charts and graphs as they believe that by looking at how a currency has traded over time, they will decide where it’s heading next. It doesn’t matter what causes price changes. As long as some people need to buy and sell currencies for whatever reason, Forex traders can make money.
Forex markets in the UAE
The Forex market is open 24 hours a day from 5 pm EST Sunday until 4:30 pm Friday New York time, allowing maximum liquidity. The Forex market opens early in Melbourne and Sydney and then spreads across Asia during the day before opening in Europe in the afternoon. Forex trading hours are 1 pm EST Sunday to 10 pm Friday New York time, offering plenty of time for traders to take advantage of big moves when they happen around the world.
When you are Forex trading, you are buying one currency while simultaneously selling another, hoping that in future, you can buy back your original currencies while selling back what you bought initially for a profit.
Types of Forex brokers
Many Forex brokers will allow their clients to trade on margin (borrow money from them). There is no central marketplace where people can exchange currencies directly against each other. Forex brokers offer traders access to Forex prices in the interbank market via an online platform to compensate for this. Forex brokers are paid a small percentage for each transaction, so they are incentivized to offer Forex trading to as many people as possible. Forex brokers can charge various commissions on Forex transactions or offer free Forex trades but still make money from currency exchanges using complex financial instruments like CFD’s (Contracts For Difference).