Who would believe that the ‘piggy box’ will not be enough to secure you a pension? The answer would be, of course, not usual people who are making savings for later in life. However, our economic world spins nowadays so fast that extra options are not only a matter of ‘not putting all your eggs in the same basket’ but a matter of must in balancing your own ‘pension scheme’. Indeed, in the turmoil of Euro zone, few saw a comeback of the once mighty dollar. So, the ones living in Euro zone saw their wages cut, pensions slashed by taxes and savings rewarded with pennies rather than quids. And here it come the question: can an individual take advantage of currency fluctuations without jeopardising its core savings?

Let’s see what it takes for a bold individual to dive into FOREX market. Following list is a basic compilation of what a beginner should not overlook:

  1. Nerves. Although some reckon not everybody can have the ability to trade FOREX, holding up your emotions may well prove to be the determining factor. It takes time to understand that is important not to over-react and ‘jump’ on the bandwagon of selling or buying just because your guts tell you to do so.
  2. Stick to your guns. It is mandatory that a trader is planning and executing his own strategy. This is an effective shield against the temptation of greed.
  3. Watch out at current events. It may look strange but watching SKY News may give you a hint on what will be next. Any sudden change in world events, natural disasters, wars can have an impact on how currencies trend goes.
  4. Practice. Setting up a dummy account and play around with a FOREX game, may prove a better idea rather than jump straight into the ‘lions’ cage’.
  5. Inflation rate. A trend of increase in spending may draw attention on a change in pair’s balance.
  6. House prices. On a long term an increase in house prices may signify an increase in borrowing, therefore need to inject more capital into the market.
  7. Unemployment. Although difficult to spot but a decrease of unemployment may lead to an increase in spending and borrowing.
  8. Trade. Exchange rates are affected by increase or decrease of trade between countries which make up the pair. Important to spot is US dollar position as a ‘safe haven’ due to an influx of technology sold by US companies.
  9. Rely on multiple analyses. Just using technical analysis of the currencies pair may prove insufficient. There are multiple elements to consider in technical analysis regarding economy evolution, nation’s social life and political moves. This is why fundamental analysis is used to validate what trend technical analysis may suggest.
  10. Watch from above. As a beginner is good to keep an eye on the big picture and not overlook regional and global developments on a long term.

Although riskier than the spot shares market, FOREX can bring higher earnings when is used with precaution to top up your earnings. Good Luck in trading!

Bibliography

Arroyo, A. (2006) “The Beginner’s Guide To Forex”, Equities, Winter 2006, pp 31-33.

McFarlin M. (2011) “Top Forex Fundamentals”, Futures, April 2011, pp 46-47.

Michalowski G. (2009) “The Six Basic Attributes Needed to Become a Successful Forex Trader”, Equities, Winter 2009, pp 10.