30 Seconds On The Business Of…Forex Trading

Gulf Business speaks to Kathleen Brooks, research director at Forex.com.

How exactly does forex trading work?

Foreign exchange is the most traded financial market in the world with over $4 trillion traded every day where traders purchase one currency for another.

Essentially, if you sell a currency that subsequently loses value relative to the currency you buy, you have made a profit and this is the principle
behind forex trading.

What are the key factors that investors must keep in mind while dealing with FX?

Always have a game plan − don’t just trade spontaneously in FX, make sure that you choose your currency pair after much research and have thought about entry prices and an exit strategy. Always use stop-losses − if the market moves against you then you want to know that your downside is protected. The trick is to learn from your mistakes and always make sure losses are lower than profits, hence why a strict risk management policy should be always be adopted when you trade FX.

What are the main challenges that FX faces in the Middle East?

The biggest challenge to forex trading in the Middle East is a lack of awareness and education. Some are wary of trading in forex markets because there has been instances of online brokerages not offering transparent disclosures and training for their clients, and misleading them with ‘get rich quick’ promises.

Where do you see the regional FX industry headed?

While the forex markets will continue to remain volatile with continued uncertainty and major issues faced by the worlds’ economies, this offers great opportunities for the savvy trader. As traditional safe haven assets like gold continue to underperform and returns on equity markets continue to remain low, we believe that with awareness and education, the region’s interest in forex markets will continue to grow as traders begin to recognize forex as a lucrative asset class.