Becoming a Forex trader in Singapore
Buying and selling different currencies to generate a profit may sound like an unusual way to make a living. Some people find day trading extremely lucrative and enjoyable, while others may only perform a few trades a day as a way to have fun in the financial markets. Regardless of your reasons for using trading apps Singapore, learning more about forex trading is always beneficial. Rather than going down the wrong path or putting your money in a platform that isn’t reputable, you can discover the best way to set yourself up to make your first trades.
Below is an in-depth beginner’s guide that outlines how you can become a forex trader in Singapore.
The concept of forex trading
Many people hear about forex trading from a friend or family member or read about how it is a way to make money on the side. The problem is that learning about forex second-hand can lead to some misconceptions.
At its core, forex is about buying and selling currencies to profit from the difference in prices. Currencies are constantly shifting in price, which you can visualize when you look at currency pair valuations on a time graph.
Say you have a hunch that the Malaysian ringgit is likely to gain value over the next few days. You may choose to sell your Singapore dollars and buy Malaysian ringgit.
As one Singaporean dollar may be around 3.3 ringgit at the time of your purchase, selling 10 dollars would net you around 33 ringgit. If the exchange rate starts to shift in favour of the ringgit and reaches 1 Singaporean dollar equivalent to 2.5 ringgit, you could then sell your ringgit and end up with 13 Singaporean dollars.
Forex trading is about making countless trades of this kind, sometimes every hour, with the hopes of profiting in almost all of them. While no trader gets every trade correct, those who are right more times than they are wrong come out ahead in the long term.
Advantages of trading forex
A significant advantage of the forex market is that you can easily enter and exit trades. There is over $5 trillion worth of currencies being traded every single day on the forex market, which means that within seconds of you listing a currency for sale, you will get a buyer.
If you sign up with a forex broker in Singapore, which is essential for trading online, you can get started with as little as $100. That means forex has a significantly lower cost of entry compared to some other financial markets.
You can also manage your risk very well with forex, as you can set up your trades in a way that ensures they automatically close out when the price rises or falls to a specific level.
Another reason people choose forex is that the costs are very low, as you don’t have to pay a fee for every transaction. Most forex brokers will only be asking you to pay for the spread, which ends up costing you less than transaction fees on stock trades.
Finding a broker and a time to trade
Now that you have a better understanding of the forex markets, you’re in a position to find a broker. Seek a forex broker that is reputable, licensed to operate in your country, and has a very clear and easy-to-understand fee structure.
You may also want to find a broker that allows for demo accounts, as using those can help you to test out your trading skills without using real money.
After you pick a broker, you may want to create a trading schedule. If you plan to trade from Singapore, you should be aware of the hours when other major markets are operating.
During the summer, for example, the Australia session runs from 6am to 3pm, the Tokyo session from 7am to 4pm, the London market from 3pm to 12am, and the New York market from 8am to 5pm. Those who trade in the winter can adjust these timings by moving them back one hour for the Australia session and bringing them forward by one hour for the London and New York sessions, respectively.
Trade as a hobby
While the ultimate goal of trading in any financial market is to generate profits, you don’t necessarily have to approach forex in this manner. You are trading with the hopes of making money on every trade – but that shouldn’t be the reason for taking on this hobby.
Forex trading is so much more than the money you may gain when you buy and sell currencies. You are learning about the financial markets and world economies as you seek to understand why and when currencies shift in price throughout a given day, week or month.
By thinking of trading in Singapore as a way to become a better student of finance and economics, you can broaden your horizons and improve your fundamental understanding of the financial markets.
