So, you’ve been hearing about forex. Maybe a friend’s mentioned it, maybe you’ve seen people talk about it online. The idea of trading currencies and making money from the global financial system is appealing, and can be very lucrative if done correctly. But before jumping in, let’s slow down and get a clear picture of how this works – especially if you’re a Kiwi just getting started.
This post is here to walk you through the basics without all the hype. No guarantees of riches, no get-rich-quick nonsense – just the foundational stuff that actually matters if you’re serious about giving forex trading a go.
An Explanation of ‘Forex’
Forex is the global market for trading one currency against another. Every time you’ve travelled overseas, you’ve likely exchanged New Zealand dollars for another currency, technically becoming a participant in the forex market. The difference is that forex traders are doing this digitally, in much larger volumes, and aiming to profit from price changes.
Unlike the stock market here in New Zealand, which wraps up by 4pm, the forex market keeps ticking 24 hours a day, five days a week. That’s a big plus if you’ve got a busy schedule — you can trade before work, after dinner, or even sneak in a quick check during your lunch break. And since it’s a global market, things are constantly shifting. Prices don’t just move because of charts – they react to everything from interest rate changes and economic data to political drama and unexpected events like natural disasters.
What Makes Forex Trading Unique?
- Leverage: Forex brokers allow you to trade large positions with a relatively small amount of capital. This can amplify gains – but also losses. It’s not something to use lightly.
- Liquidity: Because currencies are traded in such high volumes, the spreads (difference between buy/sell prices) are often razor thin. This makes entering and exiting trades quick and efficient.
- Market Drivers: You’re not just watching charts. Central bank policy, inflation data, and global events all feed into your decision-making. In that way, forex is just as much about understanding the world as it is about understanding price.
Choosing the Right Broker: It Matters More Than You Think
One of the biggest mistakes beginners make is choosing the wrong broker. The internet is flooded with options, and not all of them are regulated, reliable, or well-suited to Kiwi traders.
Here’s what to look for:
- Regulation: Ensure your broker is overseen by a credible financial authority. This helps protect your funds and keeps shady practices in check.
- Spreads & Fees: Even small differences in fees can add up over time. Look for brokers with tight spreads, low commissions, and transparent pricing.
- Customer Support: This gets overlooked but trust us—when you run into an issue at 11 PM on a Wednesday, you’ll want someone who actually picks up the phone or answers your message.
At KiwiFX, there is an option to submit your details for assistance in broker selection based on your trading style, volume, and experience. This assistance is completely free and you can find the form on the Brokers page.
What New Traders Often Get Wrong (and How to Avoid It)
Most people lose money when they start out. Not because they’re dumb or unlucky – but because they rush in without understanding what they’re doing. Here are three traps to avoid:
- Overleveraging: Using high leverage can wipe out your account faster than you can blink. Stick to lower leverage until you’ve built real skill.
- No Plan: Entering a trade just because “it looks good” isn’t a strategy. Have rules for entries, exits, and risk.
- Chasing the News: It’s tempting to trade every headline, but reactionary trading is usually emotional trading. Stay disciplined.
How to Get Started the Smart Way
If you’re serious about trading forex, start like a professional – step by step.
- Demo First: Every broker KiwiFX works with offers demo accounts. Practice with virtual money until you’re comfortable.
- Learn As You Go: Don’t fall into the trap of endlessly studying without ever executing. Learn the basics, then begin slowly.
- Start Small: There’s no glory in risking thousands right out of the gate. Start with micro-lots and build confidence.
- Use a Trusted Broker: This can’t be overstated. Your broker is your partner in this journey. A bad one will cost you more than any losing trade.
Final Thoughts: This Isn’t a Shortcut, It’s a Skill
Forex trading is not a lottery ticket. It’s a craft. One that requires patience, curiosity, and above all – consistency. If you treat it like a business, it can become a serious long-term skill. If you treat it like a gamble, you’ll burn out fast.
At KiwiFX, we’re here to support the former. And we’d love to be part of your journey.