There is one moment in everyone’s life where they may have heard or saw, the news related to the currency trading markets and was intrigued to know more about it. Perhaps they may have been interested in currency trading as well and see themselves in a bright future as well while loads of cash flow into their pockets.
Even though currency trading is fascinating, it isn’t easy for everyone. It is why we will be informing you everything about currency trading NZ so you can master this game as well!
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What is currency trading?
Well, first, we need to know more in-depth about what exactly currency trading is. As the name implies, it involves currencies. It is the buying and selling of currencies at a profitable margin because the chances are that they will increase in value with time. It causes you to receive profits if the demand for a particular currency increases. Currency exchange is most commonly known as Forex trading.
Terminologies you need to know
As a beginner in forex, there are a few terms we need to know before we start investing here. You should know these basic in order to do Currency trading NZ.
Currency pair: two different currencies are competed for side by side by the forex trader – you, about whether the currency you prefer will be having more profit or not. The assumption is made upon the research done by you regarding how the particular currency has been performing over the years.
It is mostly shown as, e.g., EUR/USD, showing that we are trading for euros against US dollars.
Leverage: the money you borrow from the trading account. It allows the trader to have low expenses while maintaining a large contract size.
Bid and ask Price: traders as bidders, who are willing to sell a currency for a demanded price of their own choice. The asking price is by another trader who is interested in buying the currency.
To go ‘long’: Going long means you are investing in a currency that will increase in demand. The first part of the pair is bought, and the other part is sold. E.g., EUR/USD, where euros are bought by the trader while selling the US dollar.
Going short: Meaning the opposite of going long. Basically, to sell a currency due to chances that it will devalue after a period. Here the first currency is sold to gain the second currency back.
Margin: the initial investment or a small percentage of the currency value to be paid to start trading. It emphasizes both profits and losses.
PIP: known as Percentage In Point, which shows the exchange paid for the currency pair. E.g., 1 US dollar needed to buy 3.67 Dirham. If the dollar increases further, traders will be able to buy more dirhams.
Lot size: the size of trade the trader opens. 1 Lot is equal to 100,000 units. For instance, we have the pair of NZD/USD, opening trade in USD will be equal to NZ $100,000.
Bearish or Bullish: Bearish means prices are going down, and Bullish means that prices are increasing.
How to do currency trading NZ?
Before anything, you need a license for forex trading acquired by the FMA – Financial Service Provider, located in New Zealand. There are requirements needed to be fulfilled to obtain your license, which is only valid for New Zealand residents. The following requirements depend upon the type of client interested in trading, such as a business owner, shareholder, etc.
The following requirements are:
- Copy of valid passport
- Utility bill or bank statement for proof of business or residential address.
- Bank reference letter
- Your lawyer or Chartered Accountant’s reference letter
- Certificate of your educational qualification
- Bank balance confirmation- mainly for shareholders
The time taken for obtaining your license through FMA may take longer. Still, legal license provider companies that deal in providing licenses make the process easier for you, and it is less time-consuming for the license to be approved. You need to follow this in order to Currency trading NZ in a good way.
Secondly, it is important to be informed about forex contracts that provide information about different currencies and their performance by giving authentic statistics.
Contracts like CFDs, Options, and Futures are widely known among the traders in New Zealand and are recommended!
Best brokers for Currency trading NZ
Most importantly, the wisest decision left to be made is to decide which forex broker to invest in.
To make it easier for you, we have listed the top three brokers based in New Zealand and are high in demand and profitable. The following brokers are:
Black Bull Markets: found in 2014, it is the most reliable company that has an up to online data system, making it easier for you to sit home and invest. The big catch? You are being offered a 30-day demo trading account to understand the whole forex system and the company’s ecosystem!
Jarden: for an experience of over 60 years, this company has covered many different investment products over the years and is highly known for it. It is regarded as the main competitor against other platforms.
Plus500: having an FMA license, the company deals with multiple investment types like shares, forex, indices, and even cryptocurrency like Bitcoin! It offers multiple payment methods and is very beginner-friendly to use.
So, these are some of the best brokers for Currency trading NZ.
Benefits and purpose of currency trading NZ
The main reason why people are heavily invested in currency trading is due to the great chances the trader sees in profits flowing into their bank. But here are a couple of more reasons why you should invest in forex.
- A beneficial side hustles for those who have very limited time to offer. You can show up anytime you have during the day without having any restrictions.
- Knowledge is power, no matter what it is related to, and forex trade may encourage a person to gain knowledge related to their currency and the ones they are investing in. Since forex relies on deciding to go long or short, the decision heavily relies on the country’s current status and the way it is performing all around the world.
- Fast liquidity. The investment made in currency gives us profit faster than on any other resource. It can be easily sold and bought without extra expenses and is easier to handle.
- It is easy to find buyers and sellers in forex trading as you are familiar with people and their interest in a particular currency.
Since forex is very lucrative, there are also possibilities that you might get in touch with a scammer. It is why it is very important to know your forex broker before making any investment.
- Do not rely solely on the internet. There are many deals and false benefits that brokers provide, which may cause you to lose all of your investments. These people can easily show up on major publication sites by tricking the Google system and are easily available on YouTube.
- A thorough background check is needed for forex platforms you haven’t heard about from anyone who already has forex experience. Chances are, these platforms do not have a license, and such people usually lure you in through call centers.
- Many social media personalities offer to provide the masses, claiming that forex trading can be learned with a 7 – week course for $50. Or worse, that you will have to sign-up for highly informative coaching lessons, which charge you around thousands of dollars.
- The fact is that information is already readily available if you talk through an authentic trader or broker who has vast amounts of experience.
- Your instincts and thought process matters a lot if you think a product is not worth your investment. There are plenty of smooth talkers claiming a product will be high in demand and ‘you will miss the chance of this huge offer.’
- These are traits of persuasive communication, causing you to believe in them. So it would help if you were cautious of this behavior.
With all of the information needed to get started, I hope you start Currency trading NZ with patience, knowledge, and dedication, which are needed to be a successful currency/ forex trader.