Singapore is one of the most dynamic and innovative countries in Asia. Many forms of investment are available to Singaporeans, ranging from stock market trading to property investment.
Forex is the simultaneous buying of one currency while selling another. The price at which you buy or sell depends on an assortment of factors, including the economic performance of governments, interest rates and inflation rates.
How to get involved in Forex Trading?
Forex trading is very different from other investment classes since it requires specific prior knowledge before getting into it. As with anything else in life, there are always risks involved in investing money you cannot afford to lose. A person must be sure that they have the financial means to risk any potential losses and enough expertise in forex trading, which can only come with practice.
What is Margin Trading?
Margin trading is borrowing money from a broker to open a forex position. It means that instead of using your cash, you borrow money from a broker - by putting down a deposit with them as collateral. You then use this borrowed sum to put down a position on currencies. If the prediction you made were correct by being able to buy low and sell high, then the profits would be yours to keep.
How is Forex Margin Rate Calculated?
The margin rate brokers offer generally depends on market forces and other factors, such as the volatility of the currency pair you have selected for trading. Usually, currencies with high volatility tend to attract higher margin rates from brokers. Some may even require a certain amount of money in your account before allowing you to trade using margin money.
Is Forex Trading Legal in Singapore?
Since forex trading is a form of leveraged trading, it can be pretty risky, especially for new traders who are not familiar with the market dynamics and how they affect currency prices. In Singapore, these regulations are set by MAS (Monetary Authority of Singapore) through subsidiary legislation such as the Securities and Futures Act and Financial Advisers Act.
What are the Risk Factors of Forex Trading?
Since forex trading is a leveraged form, it can have very high returns but requires just as much or even more risk. Hence, there are several risks that you should be aware of before engaging in this type of trading :
- One risk is market volatility which refers to how quickly the value of a particular currency may fluctuate during a specific period depending on its intrinsic value and other external factors such as political developments, economic data from the country of origin, etc.
- Another risk is liquidity. It refers to how easily you can convert or exchange currencies due to financial constraints.
- Leverage ratio refers to the amount of money used in trading related to the amount set aside as margin for this purpose.
Types of Accounts Available for Forex Trading?
Depending on how much money you have available to invest, you may consider registering with a broker that offers different accounts such as mini, standard, and ECN plus. The critical difference between these is the margin required to open a position and how much leverage you can access.
What are Margin Calls?
A margin call typically means that your current trading balance has fallen below the minimum required amount to hold an open position. By placing this order, you would be able to trigger a cash transfer from your credit/debit card or bank account to top up your trading balance.
Is Forex Trading Complicated?
While it is not necessarily hard to understand how currency values fluctuate on a minute-to-minute basis, it may take some time before you can develop your strategy for success.
How Does One Forex Trade in Singapore?
One way to trade forex is by opening an account with a reputable broker that offers different trading platforms - such as MT4, cTrader, or Xstation 5 - allowing different types of technical analysis tools to help investors formulate their strategies.
Are you interested in forex trading in Singapore? View this website to start your trading journey today!