Published on May 14th, 2020 | by Bibhuranjan0
Tips for trading forex in Singapore
Are you looking to venture into the forex market? If so, you’re certainly not alone. Statistics released by the Bank for International Settlements revealed that trading in FX markets reached £6.6 trillion per day as of April 2019. Three years earlier, that figure stood at $5.1 trillion – evidence of the substantial growth witnessed over the intervening period.
Singapore is one of the central hubs for forex traders around the world, along with the likes of Sydney, New York and London, and the Singapore dollar (SGD) is reported to be the 13th most commonly traded currency as of 2019. However, investing in the forex markets is a complicated business, and one that comes with a high degree of risk attached.
So, if you’re thinking about becoming a forex trader in Singapore, here are some of the basics you need to know:
How does forex trading work?
Forex (short for foreign exchange) involves the changing of one currency for another, for example swapping the SGD for the US dollar. The fundamental idea is to analyse exchange rates between two sets of currencies and make trades when you spot an opportunity by buying low and selling high. It’s a fast-paced market with shorter cycles, in line with the more volatile fluctuations of the various currencies around the world.
What are the risks?
That rapid pace and elevated volatility also poses a risk, however. It means you can swing between strong and weak positions at the blink of an eye, so you need to be able to monitor the situation closely and consistently. Furthermore, the leverage you borrow from a broker can help you make more significant profits, but borrowing funds in this way can also increase your liability if an investment doesn’t work out.
What are the benefits?
There is certainly money to be made, which is why so many people in Singapore and around the rest of the world get involved in forex trading. It’s also highly accessible – the market is open 24 hours a day, five days a week and Singapore’s time zone means you can kick off when Australia opens in the early morning and go right through to when the New York market closes.
Who is it suitable for?
Delving into the forex market is not something you should be considering half-heartedly. It can be fraught with financial danger, which means it attracts those with an appetite for high risk, and those who have significant money reserves that they can afford to lose if it doesn’t work out. As mentioned previously, its volatile nature means you also need to be able to monitor the markets closely, rather than dip in and out on an irregular basis.
Make sure you plan carefully
If you’ve taken all these factors into account and you want to get started, ensure you have a clear strategy in place first. That includes carefully choosing a reliable, trustworthy forex broker – one who offers a demo account so that you can begin to gain an understanding of real market conditions and how the trading platform works while eschewing any risk.