“World money” (CC BY-SA 2.0) by Japanexperterna.se
If the bitcoin boom of 2017 did anything, it showed the masses that it’s possible to invest in a currency and make a positive return. Indeed, as the price skyrocketed from $1,000/£711 at the start of the year to just short of $20,000/£14,200 in December, people got to see what happens when a commodity gains some mainstream attention. Now, as a student, we all know that money is tight and speculating on a financial asset might not seem like a good idea.
However, if you actually look at the online trading world and what it offers, investing isn’t the gamble some may presume it to be. Although bitcoin investors have been taken on something of a roller-coaster ride over the last few months, trading doesn’t start and stop with cryptocurrencies. In fact, thanks to online trading sites, a whole world of cash is just waiting to be traded and it’s not as costly as you might think. Now, before we dive into the nuances of internet trading sites and how you could supplement your studies with some canny investments, it’s important to note that nothing is certain. In the same way that global trading houses put millions on the line each day in a bid to buy low and sell high, you can’t guarantee a profit when you make small stakes investments.
Use the Internet to Your Advantage
What we can say though is that the tools are there for you to enjoy some success if you put your mind to it. So, when you join an established online forex trading platform, the first thing you’ll notice is a ton of numbers and unfamiliar phrases (if you’ve never dealt in currencies i.e. forex before). However, the benefit of using a major online trading site is that you can read through a series of guides before you start. Being students, sifting through complex information and noting down the salient points should be second nature. Taking this skill, you should be able to study the available literature and build up a base of knowledge not only about trading in general but what makes forex so accessible and exciting for new investors. Indeed, because currency prices can change by the second, there’s always something happening.
What’s more, through something known as pips, even a small investment can earn you a profit. In fact, this is perhaps the main reason online forex trading is a viable option for a relative novice. When you join a site, you’ll be offered something known as leverage. In layman’s terms, leverage basically means your stake will be multiplied by a set amount. Because you can’t buy the large amounts of currency necessary to trade like a “real” investor such as George Soros, trading sites will boost your investment. In practice, this means you decide that the US dollar was going to weaken against the GB pound and stake £1. Thanks to leverage, you won’t be buying £1 worth of currency, you could be buying £1,000 worth of currency. As you’d expect, this doesn’t mean you’ve instantly got £1,000. It basically means you’ve theoretically got enough cash to have a position in the market.
Pips Make Pounds and Pints
Once you’ve made your investment, pips are what you need to watch. For a currency’s value to move by £0.50, for example, something major will have had to happen. In reality, micro-movements are where you’ll see a change in your investment. Because of this, you want to use a site that gives you more pips or, in other words, goes to more decimal places. Each new decimal is more likely to change than the previous because small fractions require smaller things to influence them. For example, if you saw 1.22333 at one site and 1.223334 on another, an investment in the latter is more likely to change value because of the extra decimal place.
Obviously, understanding these concepts is important if you want to start trading forex successfully. However, what we’re trying to show you is that today’s technology makes it possible for you to get active without breaking the bank. In fact, when you combine these features with daily market updates and expert insights, you begin to see why trading forex is known as a calculated risk. Yes, there is an element of risk. But, if you do your research, manage your money and use the tools available to you, it’s a risk you can control and, potentially, profit from. Although we won’t ever tell you what to do with your money. Trading is a cerebral way to boost your weekly beer budget if you can master the basics and use the internet to your advantage.