Forex trading is a popular way to make money in Singapore. However, if you are new to the forex world, knowing where to start can be challenging. This guide gives you an explanation and will walk you through everything you need to know to start forex trading in Singapore. We will cover topics such as how the market works, what different currencies are worth and how to place trades.
What is forex trading, and how does it work?
Forex trading is buying and selling different currencies to make a profit.
The fx market is a worldwide, decentralised market where businesses, central banks, investors and traders come to buy and sell different currencies. The market is open all day, from Monday to Friday.
When you trade on the forex market, you are effectively betting on the value of one currency against another. For example, if you think the Singaporean dollar will increase in value against the US dollar, you would place a ‘buy’ order for SGD/USD. If your prediction comes true and the Singaporean dollar increases in value, you will make a profit.
Similarly, if you think the Singaporean dollar will decrease in value against the US dollar, you would place a ‘sell’ order for SGD/USD. If your prediction comes true and the Singaporean dollar decreases in value, you will make a profit.
It is important to note that you can only make a profit on the forex market if the currency you are betting on increases or decreases in value. If the currency you are betting on stays the same, you will not make any money.
What determines the value of currencies?
The value of currencies is determined by many factors, such as interest rates, inflation and political stability. In general, if a country has a strong economy, its currency will be worth more than a currency from a country with a weaker economy.
How to get started with forex trading
To start fx trading in Singapore, you must open an account with a broker. A broker is a company that facilitates trades on the forex market. Many different brokers are available, so it is essential to compare them before deciding which one to use.
Once you have an open account with a broker, you will need to deposit money into your account. This money will be used to place trades on the market. You can deposit money into your account using a credit or debit card or a bank transfer.
When you have deposited money into your account, you will be ready to start trading on the forex market. To place a trade, you will need to use a trading platform. A trading platform is an online application that allows you to buy and sell different currencies. Most brokers will provide their trading platforms, but many third-party platforms are also available.
Forex trading strategies for beginners
Here are the most popular ones outlined below.
The carry trade is a popular forex trading strategy that involves borrowing money in a currency with a low-interest rate and investing it in a high-interest rate. For example, if you borrow Japanese yen and invest it in Australian dollars, you can pocket the difference in interest rates.
This strategy can be profitable, but it is essential to remember that it is also risky. It is because currencies can sometimes move in unexpected ways, and you could lose money if the currency you have invested in suddenly decreases in value.
The momentum strategy is a forex trading strategy involving investing in currencies experiencing a solid rally. For example, if the Singaporean dollar is suddenly rallying against the US dollar, you could place trade bets on this movement and make a profit if the rally continues. However, it is crucial to be aware that momentum can sometimes be short-lived, and you could lose money if the currency pair reverses direction.
The support and resistance strategy is a forex trading strategy that involves placing trades at critical market levels. These levels could be psychological levels, such as round numbers, or technical levels, such as Fibonacci levels.
The news trading strategy is a forex trading strategy that involves placing trades based on economic news releases. For example, if the US Federal Reserve announces an interest rate hike, you could place a trade betting on the US dollar to strengthen against other currencies.
The scalping strategy is a forex trading strategy that involves placing many small trades over a short period. For example, you could place 100 trades in a single day, each making a profit of just a few pips. While the scalping strategy can be profitable, it is also risky.