Forex Training - Introduction to Forex Trading
Traders 4 Traders is a Sydney based firm headed by Brad Gilbert who was a former bank traders with 20+ banking experience from CBA to Citibank.
The company has an office in Sydney (71 Macquarie Street) where on site courses are held. There is also an online live trading desk where you can watch real traders analysing and trading the market live.
There is also an online training program where Australian forex traders help develop new traders skills, knowledge to start trading with a sufficient level of acumen.
Overall, T4T are the best forex training providers in Australia but they also have a premium price tag on both their online training and off-site courses in Sydney. If you plan to make serious long term forex trading then this provider is for you.
Knowledge to Action is one of Australia’s largest forex training provider which not only operates in Australia but also other worldwide locations having taught 10,000+ forex traders to date.
Their two day seminars focus on the basics of forex trading and provide future traders with any one of three strategies.
These courses are cheaper than T4T due to in part that they have relationships to brokers which they make you trade through. They are also run by trainers who have less corporate experience than the T4T team but for those just looking to modestly trial forex trading this could be the provider for you.
FX Charts Daily provides regular outlooks on currency pairs (such as USD to EUR) focusing on helping traders digest the day’s movements and analyse charts.
While this is an American website so most updates occur at night in Australia, their wraps and outlooks can be very helpful for Australian traders.
Forex Signals has a unique signal service and free trading room allowing traders to interact with experienced traders. There is also the option to copy the traders into an account using their copy software.
The traders provide a 2 week trial period to copy their trading allow automation and to make adjustments for key events that impact on currency values.
About the Foreign Exchange Market
Currencies are traded at the foreign exchange market. Whether you realise it or not, currency is important to people the world over. This is because you need to exchange currency so as to conduct foreign business and trade.
For instance, if you live in the U.K. and wish to buy wine from Italy, either you or the company you buy your wine from has to pay the Italians for the wine in Euros. Therefore, the U.K. importer would have to exchange the equivalent value of Sterling Pounds into Euros. This is also the case when you travel. For instance, an Australian tourist in Kenya can’t pay in dollars to see the wildebeest migration in the Tsavo because it is not the commonly accepted currency. Instead, the tourist has to exchange or convert his dollars for the local currency, in this case the Kenyan shilling, at the current exchange rate.
This market is the most liquid and largest financial market in the world because of this need to exchange currencies. It dwarfs most of the other markets (including the stock market) in terms of size. The daily average traded value, for example, is around US $2 trillion.
About the International Market
One unique aspect about this international market is that foreign exchange has no central marketplace. Instead, currency trading is performed electronically over the counter.
The market is also open 24 hours a day, 5 and a 1/2 days a week. These currencies are traded in the major financial centers of the world – including Sydney, Paris, Singapore, Hong Kong, Frankfurt, Zurich, Tokyo, New York and London – across almost every time zone. Therefore, when the trading day in France ends, the forex market begins afresh in Hong Kong and Tokyo. As a result, this market is extremely active at all times of the day, with the price quotes changing every second.
Who Trades Currencies?
The daily turnover in the world’s currencies mostly comes from two main sources:
a) Foreign Traders
Foreign trade accounts for about 5 percent of the turnover. Generally, companies sell and buy products in foreign countries. Additionally, they convert the profits from the foreign trade into domestic currency.
b) Speculation for Profit
Speculation accounts for about 95% of the turnover. Most traders in the foreign exchange market focus on the largest, most liquid currency pairs. Otherwise referred to as The Majors’, these include the Swiss Franc, the British Pound, the Euro, the Japanese Yen, the Australian Dollar, the Canadian Dollar and the US Dollar. Actually, more than 85 percent of daily forex trading affects these major currency pairs.
Why Trade Forex?
The main reason why people choose not to invest in online trading is because it’s difficult for them to understand online trading while forex trading is very easy to understand. Forex trading is ideal for individuals who first have forex training although having a history in trading other financial products (eg shares) is not necessary. It’s perfect for people who work because it’s accessible from anywhere. Trading is open 24 hours a day which along with it’s liquidity is one of the reasons why people are choosing Forex trading. Anyone can join and anyone can start with just a small amount of money plus it requires very little time as transactions are done online.
Forex is unlike other financial markets in that investors can respond quickly to any currency fluctuation, whether they occur during the day or at night. After all, forex trading refers to trading currencies from different countries against each other. The other benefits of trading in the foreign exchange market include:
a) Market Volatility and Liquidity
For starters, the foreign exchange market is the biggest and most liquid among all financial market. Daily activity sometimes exceeds US $ 4 trillion a day, with more than US 1.5 trillion of this coming from spot trading. The volatility within this market enables traders benefit from fluctuations in exchange rates for speculative purposes. However, as a trader, you need to keep in mind that the greater the volatility, the greater the risk potential.
On the other hand, liquidity is a term used to refer to the number of sellers and buyers willing and able to engage in a trade at any given point in time. As a matter of fact, assets with greater volatility are often traded frequently, thus translating into higher volumes of trade.
b) Low Cost of Trading
Another important term you should know is the spread. It refers to the cost (or price) to trade with most forex traders. The spread indicates the difference in amount between the asking price and the bid. Spreads in this market tend to be tighter (or much less) than those applied to such securities as stocks. As a result, over – the – counter forex trading is among the most cost effective and profitable method of investment trading.
c) Advantages of Margin – Based Trading
Most over the counter forex brokers tend to offer margin-based trading accounts. These accounts are different from credit based accounts in the sense that when you trade in margin accounts, you first need to open a financial account with a broker before funding (depositing money in) the account.
After funding the account, you can trade as you wish. However, you need to ensure that there is sufficient margin left in your trading account. Using the leverage, you will be able to trade larger positions (than would otherwise have been possible) based on the actual balance in your account. Thus leverage provides greater potential for higher returns. The only downside to this is that you also face greater risk and you can suffer higher losses quickly. The best forex broker leverage available is approximately 500:1 by the most popular brokers.
d) Potential Profit Irrespective of Market Direction
A short- sale (or simply a short) refers to the selling of any given pair of currencies before you buy it. You can easily enter into short sales in the foreign exchange market. In such a case, you would need to buy that currency back for a lesser amount than you got when you first sold it. The difference will represent your loss or profit.
This ability to short sell means that you can make a profit, irrespective of the direction in which the market moves. When rates increase, you can profit if you ‘go long’ (buy) on a currency pair before selling it for more than you paid. On the other hand, when rates fall, you can make a quick profit if you ‘go short’ (sell) a currency pair, then buy it for a lesser amount than you earned when you shorted that particular currency pair early. Forex training is critical to ensure you have the strategies deployed maximise success. Overall, forex trading can earn you a profit irrespective of the market direction.
Finding The Right Forex Broker
Our forex broker comparison features throughout this site make it easy for currency traders to find the right broker for them. Brokers generally either focus on ease of experience and education for beginner traders, reputation and trust for intermediate traders or low spreads mixed with high leverage for experiences traders. The key is to make sure the broker is Australian regulated to provide extra piece of mind compared to overseas regulated forex brokers.