Why I Started to Trade FX
Your capital is at risk. CFDs are leveraged products and can result in losses that exceed your initial deposit. Please ensure you fully understand the risks involved. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Options are complex financial instruments and your capital is at risk. Losses may be extremely rapid. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. IG Markets Limited. FSP number (41393) Your capital is at risk. CFDs can result in losses that exceed your initial deposit. Please ensure you fully understand the risks involved. IG Limited is regulated by the DFSA and is a company registered in the DIFC, Dubai, United Arab Emirates.
If there’s one thing in life that is guaranteed, it is that everything is always changing – and no-where is this constant change more apparent than in our markets. The sum of billions of daily transactions and assessments of risk, movements in financial markets and asset prices flow as the marketplace adapts to new data or sentiment, and they can be ruthless.
Through recent years the pace of change has been quicker than ever in financial markets. Swathes of new products and assets have appeared, from cryptocurrencies to fractional shares, and old structures and legacies have been swept away. The gradual movement in underlying trends can add up to huge changes over time, and major events can quickly translate into high volatility. When I first started trading financial markets there was always one asset class that stood out to me as the best way to capture these trends, and not just for its pre-eminent size, liquidity and history – I believe FX is one of the best arenas to trade the macro themes at play in the world around us.
Humans have a deep need to trade in anything useful – gossip, businesses, avocados – you name it. It has been key to our evolution and the spread of prosperity. Identifying the macro themes in our globalized society, and working with them, is the core of what successful enterprises or traders do – a business might anticipate and build demand and then supply it with the right product or service, and a trader might identify long-term and short-term trends in multiple assets to decide when to enter or exit a position.
Trade in ideas and information is not equally distributed and never will be. However this is where the foundation of the financial market, and technical analysis itself, comes into play – everyone can see what the price is, and can find out what it used to be. By knowing what price willing sellers and buyers are transacting something right now compared to history, you have a good idea of what the current trend or sentiment of the market is. But this price information is only as good as the participants available, and no market is more liquid than FX, with average daily turnover in the institutional market of trillions of dollars.
When I took the plunge and started to take small positions on currencies, it was during the early stages of the great financial crash in 2008. What unfolded over the next couple of years was dramatic and devastating in many ways, but it was also an education for anyone who happened to be trading. As the news darkened and we did not know which bank or industry giant was next on the chopping block, it occurred to me how little an investor in a company really knows about a business, beyond quarterly snapshots. When you step up to the world of FX though, you are trading the big picture – economic data, breaking news, interest rates, government borrowing, international trade are all part of the action, and as such there is plenty of information available and analysis you can do as an individual trader.
Ultimately we all have to decide for ourselves what the right trade to make is, and everyone will have their own unique analysis. But the concepts at play in the FX markets are often the same you read about in the news each day, and the comprehensive analysis and data available at DailyFX can help to connect the dots between these concepts and the price movements we see every day.
If there is a volatile period in the stock market, there are alternative markets like FX that are not strongly correlated to share prices. Because you are trading the different economies of the world against each other, you could go long a relatively higher-performing currency against a lower one, even while the global economy is falling down. As an entirely separate asset class, there are diversification benefits to FX.
I believe that participation in financial markets should be open to as many people as possible, that it’s not the exclusive right of big business, so the widest range of potential investors and traders can take part. IG exists to empower the entrepreneurial and adventurous to access the FX world through our award-winning platform.
Retail FX brokers like IG Group have been at the forefront of customer innovation for many years, and most new clients can open an IG account in under 5 minutes with our automated application technology, making the step from thinking about taking a position on the FX market, to trading it, as straightforward as possible. If you’re just exploring FX for the first time, then welcome to a new part of your financial world! IG offers no-obligation demo accounts to practice with virtual money and start to build up your trading knowledge in your own time. I hope you take advantage and start to learn more about the oldest asset class in the world.
---Written by Rupert Osborne, CEO of IG US
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.