How can you get started as an Asian forex trader?

The Asian forex market is actually one of the major players in the global foreign exchange space. Statistically, studies show that it accounts for about 30% of the global forex trading volume. In another place, a study by Imarc Group found that the Southeast Asia market alone was expected to grow by a CAGR of about 10.41% in the next few years. 

Even though the market really shows great potential, as the studies show, the importance of getting the right knowledge as a beginner can never be overemphasized.

In fact, experts can confirm to you that a significant number of traders often miss it because of ignorance, and you don’t want to be part of the statistics. But if you’re stranded about just how to get started, worry not. This article will highlight critical tips about forex trading for beginners while narrowing down to the Asian market.

Understanding forex trading

Just as the name suggests, forex basically involves trading or exchanging currencies. The most intriguing aspect is that there’s usually no central marketplace – all transactions happen through computer networks connecting traders globally. And you may actually be surprised to learn that, on a global scale, close to $850 million is traded per second.

So, what was once a niche market secluded for banks and established financial firms has now opened up to individual investors who can participate through online trading platforms, like OneRoyal, among many others. The whole concept is usually about anticipating and capitalizing on currency value shifts. So, there will be two currencies: one that must be bought and the other that must be sold.

Let us assume you want to trade using the euro/dollar currency pair. If, according to your assessment, the euro will strengthen against the USD, you will buy the euros and sell dollars, with the aim of selling the euros later at a higher price. Major markets are open 24 hours a day, five days a week, with most of the action happening in these main financial centers.

Top strategies for beginners

Carry trading strategy

In carry trading, we usually borrow money from a currency with a low interest rate and invest it in a currency with a higher rate. The goal is to benefit from the interest rate difference between the two currencies – you only profit if you buy or sell a stock at a price lower than its current price. 

To get the ins and outs of this strategy, always take advantage of demo accounts at first. The best part is that the effect of negative price action is quite minimized.

Trend trading strategy

Trend trading mainly focuses on using prevailing currency trends. To take advantage of it, you may need to be acquainted with technical analysis tools like trend lines, momentum indicators and so on. These tools help to identify patterns in price movements and assess charts to identify areas of support and resistance.

You can enter a long position if the price is trending upward or a short position if it is trending downwards. Here are some of the common trend types:

• Primary: These ones last for months or fewer years
• Secular: Are long term and can even last for several years or decades
• Intermediate: Are way shorter and can last for days or a few weeks
• Minor trends: They are most used by day traders and mostly last for only a few days

Swing Trading Strategy

Simply put, swing trading involves buying and selling securities to profit from short-term price fluctuations. While most traders use technical analysis to tactically enter and exit trades, a good number of swing traders also adopt fundamental analysis.

And it follows that you must always be keen, especially because accurately predicting that an asset will reach a certain price within a specific duration can be complex. So, you will always need to determine the reason for buying or selling at a specific price, why the price might hit a particular level, etc. when entering a swing trade.

This is why some experts believe fundamental analysis is not well suited for entering and exiting the market. Technical analysis, which focuses on price context, maybe a great option for visually identifying entry and exit points, stop-loss orders, and so on.

Parting thoughts

Even though studies show that the Asian forex market has great potential, there are several things you cannot afford to ignore as a trader seeking long-term success. For instance, do you actually know that in countries like India, more than 95% of traders are more likely to lose money? Plus, most traders don’t proceed with the venture within one to three years.

Such statistics are a testament to the fact that you can’t avoid knowledge and expect to be successful. Remember, the forex market is quite complex as it needs a combination of multiple factors before you can make accurate predictions. Therefore, it is important for anyone seeking to launch in the sector – whether Asian or not – to pay critical attention to acquiring the right knowledge before making further steps.