There are numerous ways of making money nowadays. A simple and more importantly, legal, way of making money is by trading foreign currency. Commonly known as foreign exchange trading / forex, this is one of many ways of generating revenue.
The market is more accessible to less affluent individuals nowadays, so if you’re a savvy investor, you can make quite a bit of money.
Although the market is fast-paced and quite unpredictable, the rewards have the potential to be great.
Some basic concepts about Forex trading:
It involves the buying and selling of amounts of different global currencies. The relative value of various currencies fluctuates on a daily basis, so the high liquidity of the market makes it possible to make gains very quickly.
As a trader, it’s important to watch the market very carefully and to pay attention to global trends which affect markets.
Tell me more about trading in South Africa:
The trader acquires an amount of money in the currency of their choice (known as the base currency).
The goal will be to sell off this amount at a higher rate than the second currency. So essentially, the net value of the initial investment can be increased over time by converting it to other currencies that are worth more.
Find a suitable broker.
This is an intermediary that specialises in buying and selling of currency on the market on your behalf. Ensure the broker is qualified and registered. Also make sure that all SARS regulations are followed. It’s worth noting that SARS places certain restrictions on exporting currencies and that online brokers can currently not be registered in South Africa.
Gain an in-depth understanding of how the market works.
You can sign up for a trading course, online or at a university or other institution. You’ll learn about trading fundamentals like PIPs, the calculation of currency exchange rates, differences between bid and asking prices, etc.
Set up a free online demo account.
This gives you a practice run. You can trade as a “ghost” on the market using fake money.