Sharefounders broker experts have prepared a guide for novice traders. Before starting trading, it is useful to get some theoretical knowledge about the forex market to feel more confident. So, according to Sharefounders, forex is an international currency exchange market, founded in 1976. In this market, the currencies determine the exchange rates to each other. The large banks, private and public, international businesses, as well as speculators, brokers, and traders participate in forex trading. The latter use the currency market as a source of income: since currency quotes are continually changing, traders try to make money on the price difference.
Nowadays, individual traders can also enter the currency exchange market. However, they cannot do this directly: they need a proxy or a mediator – the brokerage company. The brokerage supports several important functions: it opens the gates to the large international market, it serves as the insurance company and the guarantor for the traders provides the software for trading, consulting and informational support, and so on. Sharefounders, a broker with an excellent reputation, can be a good start for the new trader on this market. However, before discussing the broker company, we will focus on several frequent questions that novice brokers ask.
Is the forex market equal to a stock exchange?
To some extent, forex is similar to the stock exchange in a broad sense. A stock exchange is a platform where securities are traded, as well as the forex, Sharefounders writes. In the stock market and in the forex market, the traders buy the financial assets and sell them trying to earn on the price difference. The main difference is the asset in use. The stock is the financial assets related to large corporations. If the corporative business goes well, the price of the stock increases, and vice versa. The rate of the currency depends mainly on the economic situation in the emitting country. Reviews show that there are also some differences from the stock market and other financial markets.
First, the currency market works around the clock. The forex market never sleeps. World banks, which determine the fluctuations of currency quotes, are located in different time zones. As they open, they connect to the internet at different times. It helps to make trading in the foreign exchange market non-stop. So, the trader can make the transactions anytime. Although, there are periods of daily activity, the calm periods, and a few days a year when trading volumes are minimal - public holidays in the USA, Europe, and Asian countries. Business activity at these periods almost stops; however, the automatic trading system continues to work.
Second, the forex market exists only online; it is not tied to a specific location, state, or city. The stock market has its own centers – in London, New York, Tokio, and some other large cities. The activities of the forex market are closely connected with the activities of these financial centers but do not depend on them. This is its unique selling proposition in terms of marketing. Anytime from any location, you can connect the network and get started. Of course, it is a problem for a single trader to enter a large market, because the size of lots in this market amounts to $ millions. To start trading, individual traders need the help of intermediaries - brokerage companies – for example, Sharefounders broker.
So, the difference between the stock market and forex market is small but essential.
Why does the novice trader need the broker company?
As it is mentioned above, the international currency market is the battlefield for the large players. They protect the market from the small players because operational expenses for their service are too high. Thus, the small players – individual traders – create the groups within the brokerage companies, like Share founders. It is not the scam, but this is the method to pass an entry barrier. The brokerage company works as a leader and as a guarantor for the group of traders. They combine their capitals and become big enough to enter the international currency market as a player under the name of Share founder broker.
Further actions, however, do not differ from the trading on any other market. A trader selects a currency pair (or pairs), opens a trading position, and observes the price fluctuation. Fluctuation is the price change that occurs on different reasons. If the trader’s forecast is correct, the position closes with a profit, otherwise, the trader loses money and often starts blaming the broker, for example, claims Sharefounders scamers. In addition to fundamental factors, exchange rates fluctuate because of the economic news, policy news, business reports of large corporations, and even natural disasters. But after the exchange rate drops, it goes up again.
Every novice trader has to remember that the Share founders broker company supports its client. The clients are the main assets of the company, because the brokerage gets fees, or spreads, from each transaction of every client. Thus, the profit of the traders means the gain for the broker. If the trader multiplies the capital, he or she continues trading, bringing the additional money to the broker. Thus, the broker always plays in one team with the trader and protects its interests. The broker provides the consulting and informational support, news, analytical tools, trading software, and other features for successful trading.
How to start real work in the forex market?
To start working on forex, you only need a computer with Internet access. You open an account in one of the brokerage companies and then proceed. Please remember, that due to lack of information, most novice traders lose money and leave the market forever, claiming Sharefounders is a scam. The problem is that they believe it is possible to win a capital after the first several transactions. To make money on forex, it is not enough to read a couple of articles and threads on thematic forums. Indeed, professional traders are already working on the market, and a newcomer will have to compete with them.
The professionals are armed with knowledge of the global economy, technical and fundamental analysis. However, the most valuable tool is practical experience. The professionals, such as Sharefounders forex traders, have thousands hours of trading. They made their personal mistakes and some conclusions after the first losses; they have already developed their trading strategy. So it’s better to spend time on serious training before risking your money. Start by studying the literature, listen to some training webinars or video courses, and open a demo account. Many brokerage companies have training courses for novice traders. Only after that, you can try to compete with professionals.
How much money is needed to learn to trade?
The good news is that you can learn for free, the knowledge itself can be found on the internet. There is enough information for novice traders that explains the basic concepts and mechanisms of the forex. Sharefounders recommends opening a demo account while learning the theory. Many brokerage companies provide such a service, including the Sharefounders broker. Reviews show that on a demo account, you can learn how to work in the Forex market: install a trading terminal, train to understand the charts, check the system of placing orders, and follow the nuances of currency speculation. After a short period of training, you can switch to the real account.
How long does it take to train? This usually takes a month or two if you do it daily for an hour or two per day. When you feel ready to risk real money, you can open a real account via the same brokerage company. As a rule, the minimum deposit is limited to $ 100, and the maximum size is not limited. However, be aware of the risk level. The experienced Share founders forex traders say the start with the demo account does not teach the novice trader to evaluate the risk level correctly. That is why many of them lose their money when they start trading with real money.
Is it possible to lose money in the forex market?
There is one immutable rule in the investment market: the higher the risks, the greater the potential profit, and the higher the chance of losing money. It makes no sense to blame the broker and write that Sharefounders scammer. In this sense, the forex market is not much different from the start-up investment market. If a start-up investor has to choose the object for the investments, an application for food delivery, or some exotic option, for example, a social network for pets, most will prefer a food delivery. Although there are hundreds of such applications, the chances of making a profit are higher. The investor evaluates the risks: what is the opportunity to lose all money, what is the possible Return of Investments, how long will it take from the business to become profitable, and so on. If the investor follows business standards, the risk of losing money is minimal, as well as the planned profit. So, the first possible reason for losing money is the incorrect risk evaluation.
Not only on the Forex market but in any investment environment, there are some trends. For example, at the beginning of the 21st century, it was popular to invest in the stock of the high-tech sector. The first investors made good money on these stocks, but they created a trend. Their followers also gained some profit with lesser risk, but the small one. On the other hand, a non-standard strategy will bring more profit - in case it reaches the stage of investment return, say Sharefounder broker experts. If the investor acts the trend, the chance of losing money is minimal. However, the profit from such transactions barely covers the broker’s commission. But if you play against the trend, the risk is higher, but also a potential benefit. Thus, the second possible reason for losing money on the Forex is the wrong trend and high risk.
Although most often, traders lose money due to the influx of emotions, ill-thought actions, and faith in luck instead of sober calculation. The illusion of easy money plays an evil game with the novice traders: they believe they can make a fortune in several transactions. After that, they lose their illusions regarding the forex and broker, claiming that Sharefounders scam. However, the third reason for losing money is the lack of emotional control and sober calculations.
It is also essential to choose a respectable broker. It is demanding without understanding the forex. Sharefounders is a broker that has established a certain reputation among professional traders. Please remember that financial investment in the forex market is a high-risk tool. Therefore, get known to the working conditions and risks in advance.