How to get into forex trading
The growth of financial technology and the better realisation of IOT (Internet of Things) has made the possibility of making remote online money all the more accessible. Considering the state of our Covid economy and the restrictions that come with it, educating yourself on trading and investments in some shape or form is invaluable at this current time.
My fintech background
At the age of 18, I first became attracted to the idea of investments and started exploring the idea of ‘forex trading’. The terms ‘forex’ or ‘FX’ are short for ‘Foreign Exchange’, which refers to the trading of one currency for another - short-term investments consisting of ‘buy’ and ‘sell’ orders with currency pairs. This is essentially trading off the speculation of currency being valued higher than its pairing in a short time frame. When starting out, I learnt basic technical strategies and clued myself up with low spread brokers and how to navigate the retail trading industry. This is known as managing a personal brokerage account placing trades from a trillion-dollar decentralised market that is largely manipulated by large investment banks & hedge funds. My main field of interest is marketing, which is evidenced by my BSc International Business & Marketing degree, however I was adamant on taking up forex trading as a side hustle alongside my studies. Admittedly, my self-taught experience through social media pages, YouTube and educational websites comes with drawbacks and expensive lessons. There are other alternatives such as paid mentorship courses to speed up the trajectory of profitable and consistent financial trading.
Scepticism in industry
Many young people who use Instagram and follow social commentary pages or influencers may have already heard of ‘forex’. The marketing approach to promote forex trading has been warped by Instagram marketers who are riddled with a commission-based conflict of interest. They increase the amount of residual income from ‘clients’ regardless of whether their service allows them to be profitable. Sign up fees alone can make these ‘self-proclaimed forex gurus’ a lot of money. The idea of getting rich quick and doubling deposits is heavily romanticised, enticing a lot of young individuals who are excited at the prospect of making money. Over time this glamorisation of how profitable forex trading can be has formed a negative stigma towards it, leading people to assume that it’s a ‘scam’. This is a very misleading and damaging perception of financial trading. It is completely legal, but the plague of unauthorised mentors and signal services (mirror/copy trading) ruin the legitimacy of financial trading. It is important to do your background research on the type of people that introduce you to forex. A simple way to find out if a trading service/mentor is legitimate is by searching up their service offerings on the Financial Conduct Authority (FCA) website.
One of the obvious ways people get scammed through a forex Ponzi scheme is through an ‘Introducing Broker’ setup. A broker affiliate profits off your personal trades through commission as a reward from the broker for bringing more clients on their platform. You may be wondering, “What is a broker?”. An online broker is an online platform that conducts trade orders on behalf of the retail trader. It is an intermediary between a buyer and seller of a financial instrument. The broker makes money by charging a small incremental fee for every executed order which is displayed in the form of ‘spreads’ (the differential between buy and sell prices for currency pairs). Ex-investment banker, Anton Kreil gives further insight into this in a lecture where he exposes the secrets of the forex industry and how brokers exploit retail traders.
How to navigate retail trading (risk management, trading approaches, FCA, margins, education)
My best advice when first starting out with trading is to be extremely patient and not to have any expectations of instant financial reward. The promise of ‘getting rich quick’ or ‘flipping your investment’ can definitely lead you to blow all your money on forex trading. When starting out, it is important to acquire at least 3-6 months of trading knowledge through free online resources or a reliable mentoring service. Examples of these are www.babypips.com, Pips of Persia on YouTube, www.falconfx.com to name a few. There is an abundance of free resources online if you research well, so please keep this in mind before paying for a service outright. It is important to gain a basic understanding of candlestick charts, patterns and price action to gauge the best trading strategy that suits you. I personally prefer swing trading which capitalises on big market ‘swings’ that can be forecasted on higher time frames based on historic chart patterns, but everyone is suited to different trading styles. Good luck with your forex trading experience!
Nana Kuranchie is a 21-year-old student who has just finished studying BSc International Business & Marketing at the University of Leeds. He is interested in sports, fashion and consumer marketing. His other interests include forex trading and streetwear fashion. In the future he would like to venture into marketing, the fintech industry and the streetwear fashion space. His instagram tags are @nanakofi__ (personal page) and @nszn_fx (forex trading page).