Author: Gareth McCauley

The History of GBP: The Great British Pound

Silver coins were widely used in ancient societies. The earliest known ones were produced in Lydia around the sixth century BCE. The history of monetary systems is pervasive and contains plenty of fascinating facts and stories.

When discussing money and its history, the pound is one of many currencies with a long and storied past. This coin can trace its roots back to continental Europe despite its strong connections with Britishness. The Latin word libra, meaning ‘weight’ or ‘balance’, inspired this currency’s moniker.

Where It Originates From

The name ‘pound’ comes from the Latin phrase ‘libra pondro’, which translates to ‘pound weight’, suggesting that the pound’s origins lie outside Britain.

Although the Latin version has been forgotten, the influence of the pound is still present in the currency symbol (£). In the beginning, its worth was equivalent to a pound of silver; therefore, the similarity with mass was not accidental.

Time of the Anglo-Saxons

It is stated that King Offa, an Anglo-Saxon king, was the one who first brought money to England. He is credited with minting the first silver pennies and having his name inscribed on each one. In reality, there was a significant amount of variation in their weight, and 240 of them rarely added up to 1 pound.

Modern History

After the French defeated the English navy in 1690 at the Battle of Beachy Head, the first central bank in history was established (around 1694). The Bank of England had sole authority over this form of handwritten currency.

In 1717, for the first time, the British government pegged the value of the pound sterling to gold instead of silver. As a result of Germany’s adoption of this philosophy in the 1800s, widespread international trade was fostered for the first time in history.

The Influence of Politics on the Pound

Due to massive borrowing for World War I expenditures beginning in 1914, the United Kingdom experienced devastatingly high inflation.

Consequently, it was required to devalue the pound at the war’s end, to the point where one pound was worth only $4.70. In 1934, after the United States depreciated the dollar a year before, the pound reached its all-time high, with one pound worth five dollars.

World War II

During World War II in 1940, due to various political upheavals, the British government was eventually pressured into devaluing the pound against the dollar, a pattern that continued for several years after that. As a result, £1 was equivalent to $4.03.

The Postwar Era Until the 1990s

A few major changes occurred in the British economy due to the war. They are the following:

  • 1967: The British government declared a 14% devaluation of the pound.
  • 1976: Britain turns to the International Monetary Fund for aid due to high unemployment and inflation.
  • 1985: The pound’s value falls due to international action in the currency markets to weaken the dollar.

Since the Year 1990

The following are the significant events from 1990 to the present:

  • 1992: After Britain left the Exchange Rate Mechanism, the pound’s value fell by more than 20%.
  • 2001: The pound fell nearly 20% due to the bursting of the dot-com boom.
  • 2008: The collapse of Lehman Brothers caused the British pound to plunge by 30%.
  • 2016: The United Kingdom voted to exit the European Union, bringing the worst day ever for the British pound, plunging to a new 30-year low.

The Usual Rates of Exchange

To send money to family and friends back in the United Kingdom, you’ll need to convert British pounds; therefore, it’s essential to know the current exchange rates and pay close attention.

In addition, knowing the current currency rate can help you transfer money to and from the UK at the most advantageous times.

The Current State of the GBP

Presently, banknotes are issued in denominations of £5, £10, £20, and £50. While some £1 notes exist, they are pretty uncommon.

When it comes to coins, the denominations now in circulation include 1, 2, 5, 10, 20, and 50 pennies and 1 and 2 pounds. Special editions of £5 coins are made occasionally; however, the vast majority of the time, their circulation is purely incidental.

Choose Fair Forex – A Reliable Broker

As a company, Fair Forex is committed to devoting its resources to creating a powerful trading platform and providing fair and reliable brokerage services.

For all of your trading requirements, you can always count on us. If you require top trading services with up-to-date data, contact us today and grow your financial knowledge!

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What is the Best Indicator for Scalping?

Forex trading is not an easy endeavour and takes time for any trader to get used to the volatility and shifts of the market.

Luckily, many long- and short-term strategies can help any investor make a good trade on the forex market. One of the most well-known methods (even for beginners) is scalping. The general idea behind scalping is to profit from minor shifts in the market.

If you’re curious about scalping and its best indicator, keep reading this article.

What Is Scalping?

Compared to other day trading forms, the trading cycles associated with scalping are significantly shorter. The term “scalping” refers to the practice of trading in which traders, sometimes known as “scalpers,” enter and exit the market repeatedly during the day to make tiny profits.

They plan to execute many minor trades that, when added together, equal the amount they would have gained from a single, more lucrative day trade.

What Is the Scalping Process?

This strategy is a short-term approach, with daily profits being the goal. You make money by taking advantage of price fluctuations by repeatedly buying and selling throughout the day.

Scalping occurs for several minutes – 10 at most. Usually, scalpers make trades between 5 to 10 pips, thus gaining small profit but more frequently.

You must differentiate between scalping and pipsing, another short-term trading strategy; only this one takes place in seconds – 2 minutes at most.

Scalping Trading Types

Traders that engage in scalping may employ either a discretionary or a systematic approach.

  • Discretionary scalpers act swiftly on each trading decision they face based on their assessment of current market conditions.
  • Systematic scalpers operate more methodically and are less likely to act on impulse. Instead, trades are executed automatically by computer algorithms using AR to automate scalping. As soon as the software detects a profitable trading opportunity, it runs the trade without consulting the trader.

Top 5 Scalping Indicators and Strategies

Traders interested in becoming experts in scalping should educate themselves on the five most delicate indicators for scalping strategies. Here is a rundown of some of them.

Simple Moving Average Indicator

The SMA indicator is crucial to every successful trading plan. Average trading prices for a specified period are displayed for traders, which they can use to determine if an up or down trend exists in the market.

The simple moving average is an arithmetic moving average that considers only the most recent closing prices and divides their sum by the number of time intervals.

Exponential Moving Average Indicator

EMA indicator allows traders to emphasise more recent price action. Due to its superior responsiveness to more recent price fluctuations, it is widely considered one of the best scalping indicators. In addition, traders use this technical indicator to buy and sell recommendations based on the crossing and divergence of moving averages.

Moving Average Convergence Divergence Indicator

You can use the MACD to comprehend momentum better and track and capitalise on trends. The primary purpose is to show the correlation between the price of a security and its two moving averages. With the 9-day EMA as the default setting or signal line, the MACD indicator can help traders decide whether to buy or sell by subtracting the 26-day EMA from the 12-day EMA.

Parabolic Stop and Reverse Indicator

During an upward price trend, the parabolic SAR scalping indicator shows places on the chart where the price has recently been. When prices fall, the indicator shows higher chart positions, i.e., the dot is placed above the asset’s price to alert buyers and sellers. In addition to aiding in placing stop-loss orders, it can be used to foresee where an asset might be headed in the short term.

Stochastic Oscillator Indicator

The stochastic oscillator indicator is a momentum indicator. As a result, this scalping strategy is utilised by traders to acquire accurate movement alerts before the change occurs.

The indication is used to measure the closing price of an asset compared to its historical price movements. Traders widely regard it as one of the most valuable instruments for determining overbought and oversold signals.

Fair Forex: The Fairest Broker

Looking for a robust trading platform where you can use your scalping experience, but one with honest, trustworthy brokerage services? Fair Forex is the one for you. We provide trading services in several trading markets – indices, forex, stocks, etc.

If you have questions about trading, don’t hesitate to contact us and see why we’re called the fairest broker on the market.

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Essential Forex Trading Concepts You Should Know

 

The forex market has a daily volume of $6.6 trillion, making it larger than the stock market. It has its unique attributes, so navigating it for the first time is like driving through uncharted territory.

Yet, you can always take extra steps to prepare better for your future forex trade endeavours.
For starters, read this blog to discover the key forex trading concept every beginner and experienced trader should know.

 

The Forex Majors

In the foreign exchange market, investors trade currencies instead of stock or commodities. Since the options are more limited, the market revolves around several currencies, also known as major economies or “the Majors.” The most important ones are the US dollar and the Euro, both involved in most trades.

The other 6 important forex Majors are:

  • Japanese Yen
  • UK Pound Sterling
  • Swiss Franc
  • Canadian Dollar
  • Australian Dollar
  • New Zealand Dollar

 

Currency Pairs

When trading currencies, you will always see them in pairs. Why? Well, the values of different currencies depend on one another. A decimal number expresses this relation. So, for instance, if the EUR/USD pair is 1.4400, you need to pay $1,44 to buy €1.

Traders try to predict how the relationship between currencies changes. If they think that the US economy will perform better than the European economy, they can decide to buy more dollars with the euro, and vice versa.

You can also exchange currencies with a trader for a set amount in the future. If one of the currencies has a larger value in the future, one of the traders will earn a profit. This is known as a currency futures contract.

 

Carry Trading

Besides betting on currency value, you can also make transactions based on currency interest rates. This forex strategy is known as carry trading. How does it work? Well, the fact is that every currency has a different interest rate. The number is set by the currency’s central bank, and it depends on multiple complex factors.

Traders can borrow a currency with a lower interest rate (low-yield) and use it to purchase a currency with a higher rate (high-yield). In the end, they will make a profit out of the interest rate difference.

For instance, if currency A has a 1% interest rate and currency B has a 7% interest rate, a trader will use currency A to purchase currency B and earn a 6% interest profit.

 

Leverage

Another key concept in forex trading is leverage. Simply put, this is the money you borrow from a broker to enter a transaction. It’s also present in other trading markets; however, forex is known for its high leverages.

Essentially, in forex, you can control a large amount of money with a small initial margin. For instance, in some situations, you can deposit only 1% of the total value. So, if $200,000 are in play, you can reach the sum with only $2,000. Even though it sounds appealing, the high forex leverages can also cause a lot of harm, if they are not handled properly.

 

Liquidity & Volatility

Liquidity is a term that references the activity in a certain market. When there is a large number of transactions per day, the market is more liquid. Since forex is open 24 hours a day, Monday to Friday, and has a high daily turnover, it is considered the most liquid financial market.

At first, this sounds like a good thing. However, this concept is connected to market volatility. Volatility represents how dramatically market prices can change. A higher liquidity market has higher volatility. That’s why forex traders should be extremely careful with their trading moves.

 

Join Fair Forex for Seamless Trading

The foreign exchange market is vast and complex. It’s the largest and most liquid financial market. As a result, it attracts scammers and amateur brokers like bees to a honeypot. The best way to protect yourself and your trades is to collaborate with a trustworthy forex broker.

Operating worldwide, from Europe to Australia, Fair Forex has earned a reputation for being the world’s most reliable forex broker. Choosing us means getting access to experienced traders with a transparent, goodhearted, and professional approach.

Feel free to contact our team to learn more about the process.

 

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Which Currencies are Obsolete?

 

Currencies come and go. According to Bloomberg, over $10 billion in unredeemed outdated currencies circled in the EU after the euro was introduced.

Of course, replacing a currency is a long and complicated process. It mostly occurs in intense situations such as hyperinflation, massive counterfeiting, political turmoil, or membership into a monetary union (like the EU).

In any case, it is good to know which currencies are obsolete and the story behind them. It can help traders identify monetary instability and prepare in time. Continue reading to discover more about the topic.

 

European Currencies

The euro was first introduced as coins and banknotes on January 1, 2002, in 12 countries. The switch was deemed to be the biggest cash changeover in history. After all, those 12 countries had century-old currencies before the euro.

The union took all precautionary measures to gradually phase out national currencies. However, not everybody replaced them in time.

The transition to euro is still ongoing as more countries enter the EU and change national currencies. The most recent example is Croatia, which will probably switch to the euro entirely by 2023, making their national currency, kuna, obsolete.

Here are some other pre-euro currencies that were used in Europe:

  • Irish pound
  • Austrian shilling
  • Belgian franc
  • French franc
  • Finish markka
  • Greek drachma
  • German Deutschmark
  • Italian lira
  • Portuguese escudo

 

Shilling

If there is a currency with a complex history, the shilling is definitely it!

The shilling is a coin, or a monetary unit, with a strikingly long history in the UK. It had a value of one-twentieth of a pound and was first used as an official coin in 1550 in Britain.

For the sake of international trade, in the mid-20th century, Britain accepted the decimal system for dividing currency, and the shilling (previously worth 12p) disturbed that system. The coin circled around for a while before becoming completely obsolete in 1991.

Even though the shilling was a coin in the UK, it became the official currency in many countries, namely Austria and former British colonies. It’s still the main currency in 5 East African countries – Kenya, Uganda, Tanzania, Somalia, and Somaliland. However, there have been plans for its replacement.

 

Zimbabwe Dollar

Another former British colony, Zimbabwe has also experienced currency changes and turbulences. Matters became even more complex when Zimbabwe decolonised and created its own government.

First, the Rhodesian pound in Rhodesia was replaced with the Rhodesian dollar. Then, after Rhodesia became Zimbabwe, the currency switched to the Zimbabwe dollar.

But the inflation reached such highs that the government issued a banknote of $100 trillion at one point. During this period, there was a green light on using foreign currencies to overcome inflation.

With such severe circumstances, they had to abolish the currency in 2015 and, in 2019, launched the RTGS Zimbabwe dollar. Inflation didn’t stop, so the government once again allowed the usage of foreign currencies.

 

Yugoslav Dinar

The Yugoslav dinar was the official currency of Yugoslavia from 1918 to 2003. With such a long history, it’s normal for it to be subject to changes. However, no change was so radical as the mass banknote printing in the early 90s.

Due to political turmoil and hyperinflation, the government had to take money from its citizens, resulting in banknotes worth up to 500 billion dinars. To make matters worse, this banknote became obsolete in around two weeks.

The situation became so severe that Montenegro had to start using the German currency to survive the inflation. After a brief period, Yugoslavia fell apart, and each former republic introduced separate national currencies.

This just goes to show how political turmoil can greatly impact a nation’s currency and economic stability.

 

World’s Most Trusted Broker

Currencies constantly fluctuate and, as you can see, may become obsolete. So, you must be confident when entering the world of foreign exchange.

The first step is finding a reliable forex broker. Fair Forex has a reputation of working for our clients instead of against them. Our core values are integrity, honesty, and knowledge. We have been in the business for so long that we know the ins and outs of foreign currency exchange.

We are an ECN broker with super-fast trade execution that offers free forex tools, different types of accounts, free deposits, and a free demo account.

Contact us today to learn more about our services and to put your forex trades into the hands of the world’s most trusted broker.

 

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The History of USD: The United States Dollar

 

Today, the dollar is one of the strongest currencies in the world. It’s officially in use in the United States and has been adopted by other countries. Somewhere between ½ and ⅔ of the circulated U.S. currency is outside the U.S.

But how did the U.S. dollar make its way to the top?

The currency as we know it today doesn’t show up until the 20th century, but money in America has a much longer history. Read more to find out where the dollar came from and how it dominated the world’s markets.

 

Early Documentation of US Paper Bills – 1960

The oldest records of U.S. paper currency go back to the 1690s when the Massachusetts Bay Colony issued colonial notes to finance military expeditions. Other colonies soon followed and produced their own bills of credit.

 

Continental Currency – 1775

In 1775, the American Revolutionary War became inevitable. The Continental Congress issued a new form of paper currency, Continentals, to fund the military expenditures.

The Continental currency encountered several issues. One of them is that a large amount of money was being printed without bullion backing. This, and the emergence of counterfeits, would lead to the currency’s massive devaluing.

Congress stopped producing Continentals in 1779, and by the time the war ended, they were considered near worthless.

 

Adopting the Dollar Sign – 1785

Although Continental was denominated in dollars, it lacked the familiar dollar sign we know today. The Continental Congress officially established the dollar as the U.S. currency in 1785, with the symbol derived from the Spanish American figure for pesos.

Simultaneously, Congress decided that the money would be based on a decimal system – 100 cents to a dollar.

 

The Bank of the United States – 1791

After the Revolutionary War, the U.S. was in financial chaos. By 1785, Continentals had depreciated so much that people no longer accepted them as payment.

Alexander Hamilton proposed a national bank to stabilise the economy and establish financial order. In 1791, the Bank of the United States was founded in Philadelphia.

 

Coinage Act of 1792

The 1792 Coinage Act formed the U.S. coinage system and the first U.S. Mint. The act laid the foundation for the nation’s future monetary system.

The currency circulated as only coins for decades, but the need for financing growth brought about the return of paper currency.

 

The Return of Dollar Bills

By the 19th century, the U.S. decided to give paper notes another go. In the 1860s, new bills were printed out to help finance the Civil War. These notes were green on the back; thus, they were called “greenbacks”.

The inking, treasury seals, and engraved signatures were meant to prevent counterfeiting.

Although greenbacks had government backing, they couldn’t be redeemed for gold or silver. However, the Specie Payment Resumption Act of 1875 restored the gold standard and ensured that all paper money could be exchanged for gold by 1879.

 

The Federal Reserve Act – 1913

The 1913 Federal Reserve Act led to the establishment of the Federal Reserve System as the nation’s central bank. It gave the Federal Reserve the ability to print money and oversee monetary policy in an attempt to establish and ensure economic stability.

 

The U.S. Dollar as the Reserve Currency

In the 20th century, war had left Europe in disarray and made way for the United States to emerge as the dominant economic power. In 1944, the Bretton Woods Agreement was formed, and the U.S. dollar became the world’s reserve currency.

The dollar was pegged to gold. In turn, many foreign countries tied their currencies’ exchange rates to the dollar in an attempt to stabilise them.

However, the U.S. continued to print more money that exceeded the backing of gold reserves. Since paper dollars continued to flood markets, foreign countries became cautious and started to convert dollar reserves into gold.

 

Abandoning the Gold Standard

Following several runs on the dollar, in 1971, President Nixon enacted a set of economic policies. The Bretton Woods system wasn’t formally abolished; however, the U.S. abandoned the gold standard and no longer converted dollars to gold at a fixed value. This led to the current system of fiat currency and floating exchange rates.

 

The U.S. Dollar in the Market Today

Historically, governments, large companies, and hedge funds were the only ones engaging in foreign exchange with the dollar. But today, any interested individual can trade currencies.

You can get started this moment with Fair Forex – one of the FX market’s most trusted and fair brokers. Get quality broker services that work in your favour with complete transparency. For more questions, visit our help centre.

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Forex Wisdom to Remember

 

The forex market is the largest and most liquid – trading reached $6.6 trillion a day in 2019. Getting involved with FX markets is easy, but that doesn’t mean starting will be simple.

Beginners and experienced traders alike can struggle if they’re not prepared with the proper knowledge and methodology. In this article, we’ll talk about the best tips to keep in mind and follow when it comes to forex trading that can be a helpful tool for all traders.

 

Be Informed

It’s a bad idea to go in blind when trading currencies. You’re not expected to be an expert immediately, but you should know the basics and do your due diligence. Inform yourself about the FX markets, your preferred currencies, and the factors that affect prices.

Remember that being informed also means staying informed. Keep up with world events and changes in market conditions and regulations.

 

Make a Plan

Traders shouldn’t enter markets unprepared – this applies to knowledge and strategy. You must lay out your trading objectives and know how you hope to achieve them.

Your approach will be influenced by market analysis, risk management, and personal attitude. The trading style you go for should suit your personality so that you’ll avoid stress and maximise your chances of success.

So, before you start, carefully consider your options. How much time will you dedicate to your trading efforts? Will short-term or long-term trading work best for your preferences and circumstances?

A thought-out plan is crucial as it allows you to monitor and measure your performance and know if what you’re doing is working.

 

Practice Makes Perfect

Your trading plan can look good on paper, but the only way to know how it’ll work is by doing it. Traders can create a demo or practice account to test a platform and market conditions without risking real money.

It helps you better understand your plan and what will likely happen in an actual money trade. On top of that, it’s an excellent way to get familiar with a trading platform’s features before you jump in.

 

Consistency is Key

If you’ve devised a practical plan, you must be disciplined and stick with it. There is a fine line to walk when it comes to this. You should be consistent in your methodology and strategy and leave room for adapting to the changing markets.

 

Keep Records and Improve Strategy

Recording your trading activity is the best way to identify and learn from your mistakes. It’s essential to note dates, profits, losses, and influence factors – the reason behind the trade, emotional state, etc.

Tracking performance can offer valuable insight into your strategy and mindset as a trader and help you distinguish between useful and damaging patterns.

 

Risk and Reward

You need to know the level of risk you’re willing to take as a trader. You can use a risk-reward ratio to help you determine if a profit can be made long-term and if you’re comfortable taking on the risk.

Stop-loss orders can be used to mitigate risk and limit loss. This is an important risk-management tool to help you in the forex markets.

 

Your Outlook on Trading

Forex trading isn’t a get-rich-quick scheme. It’s work and requires a similar attitude and dedication you’d put into a job. Don’t be blinded by short-term wins; the goal is to succeed in the long run.

The best tip when engaging in forex trading is to put your emotions to the side. Whether it’s a win or a loss, an extreme reaction can lead you to bad decisions. You’ll experience a lot of both, so face any result calmly and rationally – don’t forget the big picture.

 

Trading Money is Risky

Never forget that even when you do your best to mitigate risk, you can’t eliminate it. You can lose the money you use to fund your account, so manage your finances well. For example, you should never use the money you need for living expenses on trades. Besides the risk of losing the money, it’ll make you overly emotionally invested, which can lead to bad outcomes.

 

Find a Reliable Broker: Fair Forex

Finding a reputable broker you can put your trust in is crucial, especially when it comes to currency exchange. The FX market is massive and global, making it more prone to scams and fraud. Since it’s less regulated than other financial markets, finding a safe and encouraging place to engage in trade can seem difficult.

Fair Forex is an online broker where you can expect fairness, honesty, and transparency. Join us to trade more confidently. Start by getting a free demo today.

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Is Forex Trading Like Gambling?

It’s easy to dismiss forex trading as just another form of gambling. After all, both activities involve risking capital with hopes of future profit. But while currency trading and gambling share similar characteristics, they are entirely different.

For instance, gambling is typically a short-lived activity, while forex trading is a long-term venture that demands a certain level of skill and experience as well as a methodical approach. Equating the foreign exchange market to gambling is not just illogical but also dangerous, especially for beginner traders who are still learning to control risks and make profits.

In this guide, we explore the differences between forex and gambling, as well as common mistakes you should avoid when trading currencies.

Participants

Anyone can take part in both gambling and currency trading. However, the forex market often involves bigger players, not just retail traders and individual investors. Large financial institutions from all parts of the world also participate in forex trading.

See below a list of the major players who are trading in the foreign exchange market every day:

  • Commercial banks
  • Sovereign wealth funds
  • Retail traders
  • Retail brokers
  • Real money
  • Proprietary trading firms
  • Prime brokers
  • Money transfer/remittance companies
  • Hedge funds
  • Governments and central banks
  • Foreign exchange fixing
  • Commercial companies

With such big players involved, you can rest assured that currency trading is 100% safe and legal. Some types of gambling, on the other hand, often include many legal hurdles and are prohibited in some countries.

Tools Used

While the forex market comes with its own uncertainties, technology allows traders to make more informed decisions and prevent significant losses. A wide range of technical analysis tools and software is now available to help you time and plan your trades with greater efficiency.

Some tools also let you observe and analyse market trends for several days or even weeks before entering a trade. This proves that you cannot rely on mere luck in real profitable forex trading. You need analytical skills and proper market research to make successful trades.

However, in gambling, there are no trends to study or tools that can inform your choices. With gambling, everything is left to chance and pure luck, which increases the probability of loss.

Strategies Employed

As with any financial market, forex trading incurs risks, losses, and uncertainties. This is why it’s essential to always be prepared for whatever happens. Knowledge, practice, and strategy are crucial to forex success.

Often, traders who face prolonged losing streaks are those who made trades without any technique or analysis. Some of the most common trading strategies include swing trading, day trading, position trading, and forex scalping.

Before entering any money, find the correct pairs to trade first and carefully calculate potential risk against potential reward. Make a proper analysis and look at the market objectively.

Gambling doesn’t require much strategy or evaluation beforehand. Currency trading still expects you to have a grasp of global markets and politics, and to be successful.

is forex like gambling

Common Mistakes Forex Traders Make

If you want to be a successful trader, watch out for these common slips and errors.

Ignoring Global News and Economic Data

Global news events such as GDP growth rates, elections, political turmoil, treaty negotiations, and central bank decisions can significantly impact currency markets.

Paying attention to global news will help you spot and understand trends in currency pairs. With this knowledge, you can make more informed trading decisions.

Trading Without a Stop Loss

Limit potential losses in a turbulent market by having a stop-loss order for every trade you make. A stop-loss order automatically closes a trade position at a limit price you’ve specified. It prevents you from losing more than you can afford.

Choosing the Wrong Broker

Entrusting money to a forex broker is one of the biggest risks you will have to make. Take time in choosing a broker. Review their regulatory compliance, account offerings, customer service, and currency pairs offered.

It’s better if your potential broker offers a free demo, so you’ll know what to expect when trading with them.

Work with a Reputable Broker

Choose a broker that offers a reliable and user-friendly platform where you can make a trade with ease. With spreads from just 0.0 pips and Free deposits into client segregated accounts, Fair Forex will help increase your chances of success in the competitive forex market.

Request a free demo today.

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Is Forex Trading a Good Way to Make Money?

With approximately 10 million traders all over the world, forex is the largest and one of the most actively traded markets in the world today. In fact, the market is valued at $2.409 quadrillion in 2022, with an average of $6.6 trillion traded each day.

Investing in forex can be extremely profitable and rewarding. However, income level is varied and profits depend on several factors. Like with any financial market, trading currencies involves a lot of complexity and uncertainty, especially in the beginning. While it can be difficult to estimate how much you’ll earn as a novice trader, there are several ways you can reduce risks and maximise your rewards.

Despite the unpredictability of the market, what makes forex particularly attractive for beginner traders is its high liquidity and relatively low costs. It’s also easy to enter the market with round-the-clock sessions and low capital requirements.

In this guide, we discuss how forex works and how you can maximise profits through trading currencies.

What is Forex Trading, and How Does it Work?

The forex market operates similarly to any other market that trades assets such as bonds, shares, or commodities. The main difference is that forex trading is done in pairs. When you sell one currency, you purchase another. Profits are earned if the value of the currency you buy rises relative to the currency you sold.

FX trading is not done in a central location. Instead, it’s run by a global network of banks across four major trading centres in varied time zones: New York, Tokyo, Sydney, and London. Since the market isn’t centralised, you can trade currencies 24 hours a day, making it a very liquid market.

Leverage is commonly used in the currency market. It enables you to buy more currencies even with a limited amount of capital by borrowing money typically from a broker.

Suppose you only have $1,000 worth of capital funds. You can still buy $10,000 of foreign currencies with a brokerage firm lending you the remaining funds. Through leverage, you can trade larger positions and magnify potential profits.

Can Trading Currencies Be Profitable?

The short answer is yes. FX trading has the potential to be highly profitable for active traders because of diverse markets and the availability of high leverage. You don’t need much capital to get started, either. You can even begin with as little as $500 to $1,000. A dedicated forex day trader with a good strategy and leverage can earn anywhere between 5% and 15% monthly.

However, returns don’t happen overnight. The FX market usually demands a lot of patience, discipline, and a system in place to manage risk.

How to Maximise Your Forex Earnings

is forex a good way to make money

Start Small

Invest small amounts when you’re just starting out, so it won’t hurt as much if you do lose money. You can then use the experience to determine what went wrong with your trade and how you can improve in the future.

Novice traders who buy more than they are prepared to lose usually end up exiting the market early due to huge losses. Remember, the greater your risk, the greater your potential to fail, as well.

Stay Educated

Forex requires continuous learning. There are a lot of systems, practices, and concepts to learn, such as margins, PIP, lot size, bid prices, and many others.

Likewise, it’s important to stay updated with current events. Global and political events have a significant impact on the value of currencies and the FX market as a whole. Knowing what’s going on in the world will help you make better-informed trading decisions.

Practice on a Demo Account

Before you begin trading real money, test out strategies using a demo account. A demo account simulates the trading experience without risking any real money. This way, you can familiarize yourself with the trading software and get a feel of how the market works.

Work with a Trusted Broker

Forex brokers help you connect with the banks buying and selling currencies. They also help beginners learn the ropes and avoid common trading mistakes.

At Fair Forex, we offer regulated broker services that are fair, transparent, and trader-focused. Our commissions and spreads are one of the industry’s lowest.  We also provide you with free signals, indicators, and reliable support every step of the way.

Increase your profit potential and be a successful trader by working with a forex broker with the right knowledge, experience, and attitude. Get started with Fair Forex now.

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Is Forex Trading a Zero Sum Game?

Foreign exchange trading is popular among people who want to expand their margin of profitability. Its lucrative space offers just enough positive outcomes, and the returns are frequently immediate. As much as it is viewed as a potent space for profit, however, it can also bring serious financial stagnation.

This claim is specifically valid if we look at forex using the concept of a zero-sum game, a game theory that is imperative in trading specific financial instruments. Here, we discuss the idea at length.

The Zero-Sum Game Concept Simplified

Simply put, the ratio of wins and losses in the market is just equal. For every successful trade, there is a corresponding loss tallied by another trader. As a result, the correlation between gains and losses in the market is zero, hence the name.

The concept is applicable in most of the gambling we know, with poker being the classic example. Say that two players bet $100 for a round. When one loses his bet, the other one takes it. Since the gain of one is the loss of another, there is no presence of any practical value for both players.

is forex a zero sum game

Foreign Exchange as a Zero-Sum Game 

Now, the same can be true for forex trading. Currencies are traded in pairs, and a single trade requires another transacting party to either buy or sell the pairs. It does not necessarily have to be an individual; a counterparty may be as large as a banking institution. Regardless, trades require a buyer and a seller.

The premise is simple: a trader’s win is a loss for its counterparty. Or it could be the other way around. Whichever is the case, the transaction has not established any sense of collective gain as there is a corresponding loss for every earning.

The Relevance of the Zero-Sum Concept 

Many choose to believe that forex trading works through this concept. However, it varies according to persisting purpose and conditions. Take into account the history of forex, which was only accessible by large financial institutions before the public was given all-out access.

To date, almost anyone with reliable bandwidth and a capital can share a percentage of a particular currency, which means many traders pursue profitability even at the expense of someone else’s funds.

Other Opinions About the Zero-Sum Concept

In criticism of the zero-sum concept, some traders refuse to consider it the de facto case. Some believe that trading is a positive-sum game, which forwards the idea that someone in the market does not necessarily take the negative blow of another one’s profit.

For example, a trader who buys euro today and sells it the following day for a relatively higher price has earned a percentage. The seller, who bought it at a relatively low price before selling, also earns a percentage. With that, both the buyer and the seller have benefited.

There is also the belief that forex is a negative-sum game, which means profits and losses, when added collectively, are still below zero. This perspective then creates tighter market competition as the only way to stay winning is by taking advances from another party.

This concept is gleaned from how brokerage fees charge additional fees for different transactions.

Say, for example, a broker that employs a huge workforce charges additional fees to compensate. With this, buyers and sellers utilizing the broker’s platform have more losses than they actually record during trading. Collectively, both share the same level of loss as they are charged with the same amount of transaction fees.

What’s Your Next Move?

There are multiple ways to approach financial markets if you plan on entering soon. One of the best ways to help you decide is by looking at it as a zero-sum game. For every profit made by a trader is a loss tallied by another.

The exchange might not be as immediate. But if you look at it collectively, such is the case, especially for spot trading, which involves a high level of speculation.

Whatever your move will be, take your trading with Fair Forex. We help you gain desirable outcomes through trading tools, platforms, and a wide selection of accounts. We also offer a free demo for new users. Register now to get started.

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How Old Do You Need to be to Trade Forex?

Traders, both novice and experienced, know for a fact that foreign exchange trading can be a feasible way to increase your margin of profitability. This is still true even if it carries risks due to financial instruments’ levels of volatility. And with almost everyone joining the hype of forex, interested parties have the same question in mind: at what age is it legally allowed to trade?

Starting as Early as 18 Years Old

Age is one of the many factors that need to be considered when opening an account with any brokerage firm. And commonly, 18 is the generally accepted age to start trading.

The age policy varies according to brokerage firms’ jurisdictions and the law they implement. For example, in the United Kingdom, people who are 18 years old and above can personally register with a broker, while some countries require a person to be 21 years old to do so.

It is for a good reason that brokers have restrictions on age. Trading is a taxing activity that adults can better accommodate. Anyone under the legal age can incur severe financial damage if they aren’t armed with the proper knowledge, and this financial damage can be difficult to recover from. Moreover, trading demands years of expertise in charting and speculation to ensure that profits will outweigh losses.

Getting Familiar with Trading Early On

If you happen to be underage, you can resort to using demo accounts for practice. Almost all brokers offer this type of account for anyone who wants to test a trading platform’s interface, usability, and functionality.

This is available for people under 18 as it is only loaded with a mock balance that anyone can use for trial trading. For most brokers, opening one is free and does not require the rigorous Know-Your-Customer (KYC) verification process.

age to trade forex

Correlating Demo Accounts with Live Accounts 

One of the advantages of having a demo account is getting an overview of the platform and the markets. But it is a known fact that the results rendered by a demo account do not usually come parallel with the results generated by live accounts.

Traders must learn to make realistic assumptions to offset the noticeable changes when they switch to a live account. In addition to this, it is best for demo account owners to make room for possible slippage as volatile shares have larger slippage compared to high-volume shares in an actual account.

More importantly, mindset will quickly get you on the right trading track. Even if demo account earnings cannot be withdrawn, traders must treat it as if they are trading using a live account. Doing so will indicate your emotional tolerance and your openness to the margin of losses and risk appetite.

Getting Started with Forex at a Young Age

With the help of demo accounts, aspiring traders can familiarize the technicalities of placing a trade, riding trends, and observing chart patterns. Having enough knowledge will then serve as an advantage for a trader, so you might as well engage in enriching your trading background before opening a live account.

Traders who start early also have a unique rapport and enthusiasm. Younger people usually appear more energetic, which means they can maximize each trading opportunity better than more experienced traders who religiously follow their established trading strategies and timeframe.

What Do More Experienced Traders Have Over Younger Ones? 

Simply put, young traders tend to be impressionable, most especially when losses pile up more frequently than profits. This is something that expert traders have managed to surpass as they have a higher level of understanding that anything can go wrong in trading.

Another thing is the intimidating space of forex, which younger people may find challenging to navigate. This then goes back to the need to start at an early age to offset the difficulty of learning the industry at an older age.

Lastly, a small amount of capital may give young traders a sense of hesitation when placing positions. In contrast, expert traders who manage to save enough finances can confidently go about any position.

What’s the Next Best Step for Young Traders?

You can wait until you turn 18 before legally owning a live trading account, but you do not have to wait that long to learn the ins and outs of forex trading. The point is that younger people have enough room for knowledge acquisition, and opening a demo account is just the beginning.

Fair Forex gives you just enough selection of accounts to pick from, be it a demo account or a live one. Register today and take your profits up and beyond the charts.

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