A Beginner’s Guide to Forex

moneyThe foreign exchange market, known as Forex, is the worldwide market for trading, buying and selling the world’s many currencies. Simply explained, Forex trading is the buying of one currency and selling of another, allowing you to take advantage of fluctuations across a wide range of currencies. To someone not familiar with trading it can seem quite confusing, but as one of the most widely traded markets in the world, it’s worth understanding, so let’s look at it in detail.

Why trade forex?

Forex is the most popular and frequently used market in the world today, making it very attractive for anyone starting out in trading. As a rough estimate over $4 trillion dollars worth of trades take place daily in the forex market around the world – an astonishing amount! Due to the high volume of traders and high quantities of currency being thrown back and forth this gives the forex market an essentially high liquidity, meaning it’s extremely easy for anyone to gain access to it and start trading. Aside from this, many traders prefer to use the forex market as you’re able to start trading with a minimal investment, as well being free from both commission and tax systems. Be sensible and research whether any (well established) brokers are offering a free trial, so that you’re able to try your hand at it for it before investing any money into it. Regardless of your motivation to start trading, it’s crucial that you posses the right understanding in order to succeed and build on your income or savings. Starting out before you have a complete understanding could result in making a loss and diminishing your finances, rather than enriching them.

How does a forex trade work?

In forex, you speculate on whether the currency of one country will rise or fall against another – for example the USD and GBP. This way of trading is called ‘pairs’, with the first currency called the ‘base currency’ (sometimes called the ‘primary currency’) and the second the ‘counter currency’. Forex currencies are always traded in pairs as you’re selling one currency whilst simultaneously buying another. A forex price will then show you how much a unit of the first currency will buy of the second currency. So for example, if you see GPD/USD = 1.63472 then this means, in simple terms, that one pound is worth 1.63472 USD. To buy one unit you would need to use 1.63472 dollars and to buy 1.63472 dollars you would need to use one pound.

An example of forex

If you trade within the forex market then it’s essential that you’re keeping up with the news, headlines and reports all of the time, and it’s worth asking yourself if this is something you have a genuine interest in before starting out. For example, if a story leads you to believe that the GBP will increase next to the Australian dollar then that would be the time to go ahead and do a trade. Let’s say for example you decide to buy 10,000 pounds worth of sterling at 1.41702. It will cost you 14, 710 Australian dollars. A few weeks later you may find that the price stands at 1.5702 which means when you convert back you are making a profit of around $1000. You can do several trades at once and hold different currency pairs in your account so you can choose when and where to trade them with ease. Keeping yourself well informed on current affairs, finance news and politics – basically anything that could influence a currency – is crucial to succeeding in forex, so that you’re able to make an educated speculation as to whether a currency will rise or fall.

And finally – is forex right for you?

Hopefully by now you have a better understanding of what forex is and how it works, allowing you to make an informed decision as to whether it’s something you want to try. Perhaps for someone who doesn’t have an invested interest in finance and current affairs, forex might not be right for you. It is however more than possible to succeed in forex, even with no prior experience in trading, as long as you have an understanding of how it works and the knowledge to make an informed speculation. One of the risks of trading in forex is that you can stand to lose more than your initial deposit, and so it’s absolutely crucial that you trade only using your risk capital – in other words, never trade more than you can afford to lose.

Done well, it can be hugely profitable, but as with any investment it’s imperative that you seek independent advice and have an in depth understanding before starting out to minimise your chances of making a loss.

Picture by Pinksoo

Personal Budgeting: Common Issues And Quick Fixes

calculatorAn air-tight budget is one of the most valuable things you can have in life. They will give you a much clearer picture of your financial situation, both in the present and the future, and make it so much easier to afford some of life’s luxuries. With a good enough budget, you’ll know where every last cent you earn is going, why it’s going there, and how you can divert your cashflow more economically. While everyone should be able to enjoy the freedom of a good budget, it comes more naturally for some people than it does for others. Here, I’ll go over some of the common problems people have with budgeting, and what you can do about them.

One of the most common issues people seem to have with budgeting is that their category estimates are way off. When you first had to set out a budget, you may have copied out the categories you found in a simple guide. Like many people, you simply wrote out the list, made an estimate on what you needed to budget for each category, and then tried to live by it. Again, like many people, this first attempt at a budget may have been a total failure! When you’re not that experienced in managing finances, it can be pretty easy to get certain categories way off. Energy bills have a tendency to run higher than you expect. Food bills, on the other hand, tend to be lower. The various categories of your budget can fluctuate greatly depending on various lifestyle choices, and throw your estimates off drastically. If you’re suffering from this issue, then the best way around it is to start everything from scratch. Over the next month, save every little receipt and invoice you have, add up the figures for each category, and settle on a more accurate figure. From there on, everything will be so much easier to afford.

Another common problem which people seem to have with their budgeting is that life’s little emergencies cause it to fall apart. I know a lot of people who started off with what seemed like an exceptionally tight budget. However, many of these people quickly had to learn a hard lesson. Not every month is going to play out exactly as you’d want it to! You might have to have guests over, bumping up your food costs. At other times, you may have to spend more on general household costs when you or your partner gets ill. Sure, you might have a pretty good handle on all the regular costs you have to cover. However, if you’re not thinking about these variations which can come completely out of the blue, you could end up consistently going over budget, which will completely screw up your personal finances. This may lead to you obtaining cash loans, or having to tighten things up in other areas. You’re going to need a little breathing room, and you can create it by adding a little more to every category on your budget. Even an extra $40 under each heading can give you some wiggle room when life pulls a fast one on you. Sure, this might mean a little less recreation at the start of the month. However, you’ll probably be able to spend under your budget through most months, and have a little more money to play with!

If budgeting seems like a massive amount of work to you, then you may have done your first one with nothing but a pen, paper, and a calculator. You may have been keeping all your receipts in a single envelope, and stressing yourself out by sorting through them and writing down various figures. If this sounds familiar, then it’s no wonder that you avoid budgeting like the plague! Fortunately, there are several tools to make budgeting much easier, such as Mint. This makes sorting through your budget much easier. You can simply type in a receipt and the program will instantly sort it into the right category. You’ll no longer have to sort through a massive pile of receipts, or get angry with your calculator when you make a slip-up and have to start again! Some tools also have helpful forecasting features. Do some research, and buy some software which you’d mesh well with.

Attention Students: These 3 Tips Will Cure Your Money Problems Instantly!

college-picThere can be many stressful moments in life, especially when you’re a student in college. During those years, you may find it tough to scrounge money together and survive. So, I have some financial tips to help any students in need:

Eat Well For Less

A big reason many students have no money is because they spend too much on food. We’ve all heard of the typical student diet. It consists of fast food and microwave dinners almost every night. When you think about it, this diet can be costly. Plus, as a student, you may have no idea how to shop for food properly.

 

Are you one of those students that  just goes out and buys everything you want all at once? Well, with a few clever tactics, you can make healthy meals and save loads of money. Stay clear of branded products. You’ll be surprised at how much more expensive they are. A big example is with cereal. Kellogg’s cereal costs way more than store brand cereal. Is there a difference in taste? Another tip is to stop buying ready made meals. You may think this is convenient, but it costs too much. You’ll save money by buying individual ingredients and making it yourself. The more you save, the more financially secure you’ll be during your studies.

Sell Unwanted Items Help Out Around The Campus

Do you have a lot of unwanted junk? Think about all the clothes you’ve bought and don’t wear. What about those DVD’s and video games on your shelf collecting dust? There are probably loads of things you can find lying around your room that you can sell. In fact, you can make some extra cash selling back a textbook or two. Every year, you need books for your classes. Then, they become useless, and it’s wasted money lying around. Other students will need them, and you can sell them for instant cash.

Help Out Around The Campus

 

Most colleges have opportunities for students to work. These include payment for helping out on open days or big events. You may even be able to get paid by older students to take part in their final year research project. Take a few surveys and sit in on some focus groups and you’ll earn some extra cash. Have a look around your campus and see what opportunities are around.
This article is perfect for any students out there that need financial help. Or, if you have kids that are students, share it with them to give them a helping hand.

Are You Making the Most of Your Bank’s Reward Card?

bank reward cards

I use my debit card almost exclusively these days. Unlike checks, debit cards are accepted almost everywhere, and you can make large purchases with a card without having to carry around a wad of cash. I keep “vending machine” cash and change in my wallet, just in case I get a hankering for a 6-pack of Oreos. And even vending machines are starting to accept cards!

Besides those obvious benefits, debit cards offer some good benefits, courtesy of your bank. It’s worth talking to someone at your bank (or taking a closer look at the next debit card rewards leaflet hidden amongst other junk mail) to find out exactly how to make the most of these benefits.

Here are some reasons why you should consider using your bank’s reward cards and how to maximize their benefit.

Cash Back

One of the most common rewards offered by debit cards is “cash back.” You can think of this like a discount on your purchases, because a percentage of your total purchase is credited back to your account. There is a catch, though: you’ll only get cash back when you buy from participating retailers. The retailer and the bank team up to try to increase each other’s business. It’s worth weighing the pros and cons of, for example, shopping at a different grocery store in order to take advantage of cash back rewards.

Saving Programs

Similar to cash back programs, saving programs give you a small percentage of your purchase, but this time it is added directly to your savings account instead of your checking account. If you have a hard time remembering to periodically add funds to your saving account, this rewards program can help.

It’s important to note that not all saving programs operate like cash back programs. Some will move your own money between your credit and checking accounts instead of giving you a small cash reward.

Prize Points

You can rack up points with every purchase made with your debit card, and then exchange those points arcade-ticket-style for prizes like a deluxe toaster, a gift certificate, or even (if you exercise good self-control and don’t spend your points willy-nilly) truly awesome prizes like vacation packages. Ask your bank for a full catalog of options and set a goal for yourself.

Airline Points

Worthy of its own category, it’s also common to earn airline points with your debit purchases. Once you accumulate enough points, you might even be able to fly for free, or perhaps even upgrade your seat. Make sure you know which airlines participate in your bank’s reward program, since not every airline may participate.

Important Considerations

Remember that a debit rewards program may not be something you’re automatically signed up for just because you have a bank card. Talk to a representative at your bank to find out if you need to do anything to participate.

Another important caveat is that bank rewards cards are most beneficial if you are making a lot of purchases at participating retailers. That doesn’t mean you should spend money just for the sake of accumulating points, because you’re not going to actually “benefit” from the program if it doesn’t save you money in the long run.

In short, your bank’s reward cards can be an untapped source of discounts. Know what your options are and use your card wisely every time you hit the shops.

Does your bank offer unique rewards? Let us know in the comments!

Cathy Habas is a Spanish to English translator, as well as the managing editor for Coquí Content Marketing. Cathy specializes in writing about home improvement and global advocacy. You can reach her at www.cathyhabas.com or on Twitter: @CoquiContntMktg

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