This article is about entering the foreign exchange Sydney market as a beginner and how it works.
The foreign exchange Sydney trading market is available for trading every day and every night for five business days a week. When you consider the trading volume, this is the largest global financial market. The market remains liquid throughout this trading period. If your intention is to enter this financial market, you will have to keep abreast of economic events, political events and other news related to the financial markets.
The large trading volumes are maintained in this market because of the number of entities that require foreign currencies for trading on a daily basis. Large companies require foreign currencies for the import and export from one country to another. International corporations are often required to transfer funds from their head office to their worldwide branches. To maintain a suitable forex rate, central banks often purchase and sell currencies and this makes up a big section of the market.
Unlike the equities markets, the forex market does not have a central exchange. All the forex transactions are done electronically and this ease of use has contributed to the market’s popularity. This trading method has made the entry into the market for individuals much simpler. The benefits in the marketplace for small traders are what attract many.
- You do not require a huge capital sum to trade and reap benefits from the market
- It is possible to control your risk level by using the mechanisms that have already been implemented in the market
- The constant price movements allows you to make profits
- The profits you can achieve in this market will vary, as will the losses. By implementing sound trading strategies and adequate risk policies, it is possible for you to show more profits than losses.
How does it Work?
All transactions are carried out in pairs. With every trade, you are buying and selling a currency at the same time. The rates that your forex broker quotes will be indicated as a ratio. If you were trading the US dollar to the Australian dollar, it would be indicated as USD/AUD=1.0915. This indicates that to purchase one US dollar, you require AUD1.09. If this value was to change and your new quote reads USD/AUD=1.0917, it indicates that the rate has moved by two pips. If you had entered a trade with this pair, you would have made a profit or loss based on the price movement.
Risks of Foreign Exchange Sydney Trading
The speculative nature of this trading market increases your risk level. You should implement adequate risk management policies to avoid undue losses. You have to determine an amount that you are prepared to lose should the market turn against you. You should not gamble with any funds you absolutely cannot afford to lose or that you do not want to lose. This is the reason why you should terminate trading if you are starting to show losses. This will prevent emotional trading.
The best way to enter this market is to undergo suitable training. You need to know everything about this market before you can hope to make profits in it. You should join trading forums to see what other traders are doing and how they cope with the stresses of the market.
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