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Forex Trading Demystified

April 20th, 2010 No Comments

Forex involves the trading of currencies. It is the largest financial market in the world and has an estimated daily turnover of 1.9 trillion dollars. This turnover is larger than all the worlds stock market on any given day.

The forex market does not have a fixed exchange. The forex market is considered an over-the-counter (OTC) market. The forex market is completely electronic and trades are executed over the phone or on the Internet. Until 10 years ago the forex market was the preserve of large financial institutions. Now an ever-increasing amount of individual traders thanks to the advent of the Internet and an increasing amount of online forex brokers are trading forex.

Currencies are always traded in pairs. A typical pair would be EUR/USD (Euro over US dollars). The first currency is the base. The second currency is the counter currency. The pair can be viewed, as the amount of the secondary currency that is needed to buy 1 unit of the first currency. If you were to buy the above pair you would buy Euro and simultaneously selling US dollars. If the pair were sold the reverse would happen you would sell the Euro and buy the US dollar. This might sound confusing but simply think of the pair as one item and you are buying or selling one item. If you think the Euro will go up against the US dollar you buy the EUR/USD pair. If you think the EUR will decrease against the US dollar you sell the EUR/USD pair.

When you see forex quotes you will see two numbers. If we use the EUR/USD as an example you might see 1.2350/1.2355 the first number 1.2350 is the bid price and is the price traders are prepared to buy euros against the US dollar. The second number 1.2355 is the offer price and is the price traders are prepared to sell the EURO against the US dollar. The difference between the bid and the offer price is the called the spread. The spread for the major currencies is usually 3 to 5 pips (explained later).

The most common increment of currencies is the pip. If the EUR/USD moves from 1.2350 to 1.2351 that is one pip. A pip is the last decimal point of quotation. Most currencies quoted to 4 decimal points. The exception is the Yen, which is quoted to 2 decimal points eg 139.41. The term pip is just forex lingo so if a forex trader says the EURO has gone up 20 pips against the US dollar add 20 points to decimal part of EUR/USD pair.

Forex is traditionally traded in lots also referred to as contracts. The standard size for a lot is $100,000. In the last few a mini lot size of 10,000 dollars has been introduced and this has become increasing popular. Forex trading is leveraged with most forex brokers offering 1% margins. This means you can control one standard lot of $100000 with $1000. Typically you would need a minium of $2500 to open a standard size forex account.

A mini account can be opened with $300 with most forex brokers. To trade a one mini lot you need a margin of $100, which in turn controls $10000. If the currency goes up 1% and if you traded one mini lot of $10000 you would make $100 dollars or 100% of your original margin. Forex trading is a very lucrative market to get into and it is suggested that traders new to forex trading trade a mini account for an extended amount of time. Trading a mini account is a low cost entry to the forex market, as only $300 is required to open an account. You can still make money while you become more experienced in forex trading. You can trade one mini lot until you have made your first $100 dollars then start trading 2 mini lots. As you gain more experience you can trade standard sized lots.

Forex trading is becoming increasing popular with traders of other financial products. It can be traded in amounts a lot smaller than other financial products, which makes learning forex trading safer than other markets. Forex trading can be a very lucrative market, which no trader can dismiss.

Tags: 10 Years, Advent Of The Internet, Bid Price, Currency, Financial Institutions, Forex Brokers, Forex Market, Forex Quotes, Increment, Individual Traders, Number 1, Otc Market, Pairs, Pip, Pips, Stock Market, Trades, Trading Currencies, Trillion, Turnover

Forex Trading Course Primer

April 18th, 2010 No Comments

Forex trading refers to foreign exchange. Since the currencies of different countries themselves are the commodities involved, the market has a pure behavior that is driven by large economic forces. To master this art, one should do comprehensive study with the help of a Forex trading course.

Forex trading is a specialized form of trading with potential quick and hefty profit and higher leverage than other financial markets. But the leverages it offers can be a double edged sword due to the complex and unpredictable nature of the market. Taking advantage of the leverage at crucial times with responsible risk management is the secret of this trade. But this is easier said than done. A complete knowledge of the market is the essential requirement for success in this business.

The value of a currency in the Forex market very much depends upon the products and services the country offers for sale in the foreign market. So the study of the currency depends up on the study of the economy of that particular country. For example a tea-producing country suffers a great loss in the market if the production of the tea crop fails in that country because of a monsoon or other reasons. Similarly the same can be said of any type of commodity and for any reason that affects supply and demand. The political, natural and environmental changes influence the foreign exchange market significantly. So how can one understand the market in a way that will enable him to gain profit consistently?

Forex Trading Course

A Forex trading course offers comprehensive study of the economic markets all over the world. Many factors influence the economy of a country. The savvy trader will focus on the important factors that affect the economy and how they affect currency values. The training course should offer material that demonstrates the factors affecting the economic condition of a country.

A reputable course includes facts and figures explained in the form of charts and technical analysis. They explain the reasons for the sluggish or tremendous growth of an economy under given conditions and how long trends might be sustained. A big part of Forex training involves identifying entry and exit signals using technical indicators and patterns. Simulated trading on historical data as well as demo trading in real time is extremely helpful for enabling the Forex trading student to gain experience without risking real money.

What many people do not realize is that one of the largest forces that drives the foreign exchange market is large institutions that export products such as automobiles, electronics, and commodities. When these products are sold to another country it creates an immediate demand for the currency of the country which is exporting. This causes that currency to increase in value. Conversely when a country imports products from other countries it creates an outflow of currency that weakens the importing countrys currency. These large forces are constantly at play throughout the world creating an ebb and flow in the value of the major currencies throughout the world.

It is not necessary to fully understand and follow all the economic forces in the world in order to trade Forex successfully. Many traders rely solely on technical analysis to enter and exit trades. By observing the movements and patterns on charts profitable trades can be executed without having any idea what economic news is creating the movement. This is the subject of most Forex trading courses that are popular today and makes life much easier for those who want to easily profit from this vast and popular market.

Tags: Crucial Times, Currencies Of Different Countries, Currency Values, Double Edged Sword, Economic Condition, Economic Forces, Economic Markets, Financial Markets, Foreign Exchange Market, Forex Market, Forex Trading Course, Hefty Profit, Important Factors, Leverage, Leverages, Monsoon, Responsible Risk, Risk Management, Savvy Trader, Unpredictable Nature

Day Trading Foreign Currency

April 18th, 2010 No Comments

Foreign currency trading is a high risk and high reward business. You need to devise strategies to make profits in the market on a sustained basis. Always remember that day trading in foreign currency is not the ideal way if you really want to have a long term perspective.

Day trading in foreign currency exchange is the same concept as day trading in securities markets. You take a short term bet on the price movements of various currencies in your portfolio. Thus you gain or lose depending upon the intra day fluctuations in prices of these currencies. Whether you are long or short at a particular point of time in a day depends upon your assessment of the likelihood movement of prices later on during the day. Let us explain by a simple example. Suppose you are short on Yen in the morning session of trading (meaning that you have sold yen at a price). It means that you expect Yen to decline further in the day so that you would be able to buy back Yen at a lower price and make a profit in the process. Here you are taking a bearish outlook of the market.

On the contrary, if you are long on Yen (meaning that you have bought Yen at a price), it means that you are bullish on Yen and expect it to rise further so that you will be able to sell it at a higher price and make money. Day trading foreign currency thus means taking a very short term view of the market and is fraught with risks and possibility of huge capital losses.

It is always advisable to have a long term outlook especially in the highly volatile foreign currency market. This way, you are not dependant on the vagaries of intra day shocks and expect your capital to build over a period of time. Have an assessment of economy, performance on inflation front, policies of central banks of the country and then take an informed decision, without worrying about short terms movements. A large number of traders have lost heavily while betting on day trading foreign currency. There is still no fool proof strategy which can shield you from losses if you are having an extremely short horizon.

If you really want to start in day trading, take smaller bets, just to have a feel of the market. Keep your stakes on a limited scale and close out as soon as you get a chance. Do not forget to place a stop loss position if you want to avoid carnage and scalp out at an opportune time. It is a high risk proposition and there are better ways to make money than day trading foreign currency.

When you get enamored by so called success stories of day trading foreign currency, remember that Rome was not built in a day. It takes time to build your fortune. Never allow greed to overcome reason.

Tags: Bearish Outlook, Capital Losses, Central Banks, Currency Market, Day Trading, Fluctuations, Fool Proof, Foreign Currency Exchange, Foreign Currency Trading, High Risk, Inflation Front, Money Currency, Money Day, Morning Session, Securities Markets, Shocks, Term Outlook, Term Perspective, Vagaries, Yen

Forex Trading Basics

April 17th, 2010 No Comments

What exactly is Forex Trading? When you exchange one countrys currency at the same time with another countrys it is known as foreign exchange, Forex or FX trading.

Most people are aware that when they travel from one country to another it becomes necessary to conduct trade in the currency of the country being visited. Knowing the value of various currencies at particular times can also be a great business venture because you can profit by trading one currency for another.

For example, if you buy the US dollar when it is rising in value against the Japanese yen, you can later sell it before its value begins to drop and make a tidy profit. Taking advantage of these timely dips and swells of the currencies on foreign currency market, you can make much money. Similarly, Forex traders who pay strict attention to a changing international currency market have the potential to earn big profits.

Buy Low Sell High
Forex traders deal with often complicated currency exchanges, however, successful Forex traders buy currencies when they are low in value and sell them at their peak. Although on the surface this sounds like just plain old common sense, in fact currency exchanges can rise and fall wildly within a few minutes. Holding on to a currency too long can result in a loss of value if the market for the particular currency begins to fall. So, timely and decisive responses are essential in securing a profit on every transaction.

Economic and Political Conditions
Currency values fluctuate because of events happening in the economic and political arenas of different countries. For example, a country that goes to war may see it currency drop in value, whereas, a country that reports robust economic growth, may also have a strong currency. Similar to the stock market, currency trading requires skill, luck and risk management. Successful Forex traders know when to hold a losing trade and when to get out. You cannot make money in this market if you are constantly worried about losing your initial investment. Sometimes you have to let a bad trade go and start over.

Tags: Business Venture, Countrys, Currency Exchanges, Currency Market, Currency Trading, Currency Values, Decisive Responses, Dips, Foreign Currency, Foreign Exchange, International Currency, Japanese Yen, Market Currency, Political Arenas, Risk Management, Robust Economic Growth, Stock Market, Strict Attention, Swells, Tidy Profit

Forex Trading And The Stock Market – Similarities And Differences

April 16th, 2010 No Comments

Forex Trading And The Stock Market – Similarities And Differences

Most people get their introduction to financial trading through the stock market. After all, it is the oldest and largest financial market in the world, right? Wrong! The forex trades over $2 trillion (with a “T”) a day, and has been around as long as money itself . What’s more, the forex is even easier for individuals to participate in than the stock market-and best of all, there are no commissions on forex trades!

That is one difference. But there are also plenty of similarities. Since most people have a relatively strong understanding of the stock market, and many may be considering a move from the stock market to the forex, this article will explore the differences and similarities between the two financial markets.

Differences

As noted above, there are no commissions on forex trades. This is because everything is done electronically. In fact, there is no physical place known as “the forex” — it exists entirely in cyberspace. That makes for much lower overhead, hence the “free trades” (see similarities for why trades aren’t exactly free), and also allows for a twenty-four-hours a day trading platform, five-and-a-half days a week.

Secondly, while many stock-market investors use margin, most don’t. In the forex, everyone uses margin — and to a much larger degree than anyone uses it in the stock market. In the stock market, margin is capped at 50%. This means that if you have $5,000 in your account, the maximum value of stock you can purchase is $10,000. But in the forex, typical margin ratios are 100:1, meaning you can control $100,000 of worth of currency with just $1,000 in your account! This is one of the major appeals of the forex.

Thirdly, while there are 13,000+ stocks for stock-market investors to follow (and even more mutual funds, ETFs, etc.), there are essentially eight major currencies (and only seven currency pairs) for forex traders to follow.

Similarities

Well, forex trades aren’t exactly “free.” Just like in the stock market, there is a bid/ask spread. What this means it that the market maker will pay you less for a currency than the price for which he is willing to sell it to you. For example, you may be able to buy $1 in U.S. currency for $1.0905 in Canadian money, but when you want to turn around and buy back Canadian dollars, you will have to pay more than one U.S. dollar to get back your 1.0905 Canadian dollars.

Perhaps the biggest similarity between the stock market and the forex is the use of technical analysis — also known as “chartology.” Technical analysis principles hold up no matter what asset is being traded, so if you’ve become a master candlestick-reading stock trader, you can easily apply your talents to the forex.

Finally, when placing a trade, many of the same options are available in the forex as in the stock market. Limit orders — which set the maximum price you’re willing to pay or the minimum price you’re willing to receive — can be used in the forex just as with stocks, as can stop losses.

In Conclusion…

There are a lot of similarities between the stock market and the forex, and some experience trading stocks is a good thing to have under your belt. But far superior is experience actually trading currencies, and this is not a Catch-22. You can trade currencies before you really join the forex by opening a forex practice account. Most forex brokers offer these accounts, free of charge, which let you get your feet wet without the risk of getting soaked. Learn all you can about the forex, try out your strategies in a practice account, and in little time at all, you’ll be ready to swim with the big fish in the biggest pond in all of finance — the forex!

Tags: Commissions, Currencies, Currency Pairs, Cyberspace, Day Trading, Financial Markets, Forex Traders, Free Trades, Half Days, Maximum Value, Mutual Funds, Ratios, Similarities And Differences, Stock Market Investors, Stock Trading, Stocks, Trading Platform, Trillion, Twenty Four Hours, Typical Margin

Currency Trading Tips For Beginners

April 15th, 2010 No Comments

Currency trading is a platform where individuals speculate on the exchange rate between two currencies. Traders buy and sell currencies hoping to realize a profit. In order to succeed in currency trading you will need a source of accurate and timely information. You’ll need to familiarize yourself with a whole new language.

When you start currency trading you’ll learn what a market trend is and how it will affect your trading. Trends move up, down and sideways. There are also trend classifications within market trends. These classifications are intermediate, short-term and long-term trend. You’ll learn how to look at and understand basic trend lines, which is the most valuable trading. You’ll learn about channel lines and support levels.

When you enter currency trading you’ll be able to make sales online 24 hours a day, 7 days a week, unlike the Stock Market. Many online brokers offer commission free trading and you’ll want to make sure that you have instant execution of your market orders.

A new addition to many currency trading online business sites is the ability to set up a free demo account. This is a good way to get practice about trading and learn about live quotes, charts and streaming news before you start investing with real money.

When you set up your demo account it’s a good time to test the software that the company offers. If you don’t like the software program, contact the company and see how similar it is to the software program you would get if you signed a contract with them. If you don’t like the software program try another broker. Also, decide if you want web based or client based software. Web based software is housed on your brokers website, you won’t have to install any software onto your computer. A web based software program will allow you to log in from any computer that has an internet connection. Client based software is loaded onto your computer, and can only be accessed from that computer, potentially limiting your usage.

Another thing you’ll want to check before choosing an online broker is how quickly they respond to your need for help. Seeing how quickly they respond to your questions could be key in how they respond to customer needs. If you don’t get a speedy and accurate reply you may not want to trust them with your business.

You’ll need to have high speed internet connection in order to succeed in currency trading online. The currency trading market is a fast moving one and dial up internet access will not work well for this. Another consideration could be the location of the servers used by your broker. If your broker’s servers are located quite a distance from you, say in another country, this could potentially slow down your transmissions.

Take you time and investigate online brokers. Talk with friends and family about their dealings with online brokers. Take time and do a thorough evaluation of your options before you trust anyone with your money.

Tags: Business Sites, Compu, Currency Trading Tips, Exchange Rate, Free Demo Account, Good Time, Internet Connection, Market Trend, Market Trends, New Addition, New Language, Online Brokers, Real Money, Software Program, Software Web Based Software, Stock Market, Streaming News, Term Trend, Trading Currency, Trend Lines, Web Based Software

Forex Trading And The Obsession To Win.

April 14th, 2010 No Comments

Forex trading is one of the great money making opportunities available these days. People from many walks of life, men and women, decide to join the forex trading world everyday looking for the great style of life a profitable forex trader can achieve.

But Forex trading is also a war where you can lose your money and confidence if you are not wise enough in your battles against the market, a wise, often formidable and even brutal enemy.

There is an old saying by the Chinese military genius, Sun Tzu that says, the obsession for victory is a state of mind that benefits the enemy. And these wise words apply without any doubt to the world of forex trading. In the war with the markets nothing is more damaging to a trader than the obsession with victory.

There are many new traders that think they must never close a trade until it will turn into a profitable one; or think their predictions based on a particular indicator and technical analysis will always be right and the forex market will start behaving in the way they had predicted in any moment, no matter if the charts clearly indicate that it’s not doing it and the margin of the account is getting depleted.

This is, in no way, a wise forex trading strategy; it is not a wise war strategy. With that behavior you will only be giving free money to the markets, i.e., you will be defeated by your own obsession with being profitable even if everything is going against you indicating you must close the trade or tighten your stops.

So, never fall for obsession when trading the forex markets; nothing good can result from this behavior. You must always place your stops according to your tolerance level and be wise with your indicators. Remember they can fail you. They mostly tell probabilities and when dealing with probabilities there is always room for strange behaviors that won’t agree with what you were expecting.

My recommendation; be wise, use your criteria and never ever obsess with a trade.

Tags: Forex Market, Forex Markets, Forex Trader, Forex Trading, Free Money, Life Men, Men And Women, Military Genius, Money Making Opportunities, New Traders, Obsession, Probabilities, Strange Behaviors, Style Of Life, Sun Tzu, Tolerance Level, Trading Strategy, Walks Of Life, War Strategy, Wise Words

Currency Trading Tips! Get Rich!

April 13th, 2010 No Comments

What are you really selling or buying in the currency market?

The short answer is nothing. The retail FX market is purely a speculative market. No physical exchange of currencies ever takes place. All trades exist simply as computer entries and are netted out depending on market price. For dollar-denominated accounts, all profits or losses are calculated in dollars and recorded as such on the trader’s account.

The primary reason the FX market exists is to facilitate the exchange of one currency into another for multinational corporations who need to trade currencies continually (for example, for payroll, payment for costs of goods and services from foreign vendors, and merger and acquisition activity). However, these day-to-day corporate needs comprise only about 20% of the market volume. Fully 80% of trades in the currency market are speculative in nature, put on by large financial institutions, multi-billion dollar hedge funds and even individuals who want to express their opinions on the economic and geopolitical events of the day.

Meaning of Trading in Pairs

Because currencies always trade in pairs, when a trader makes a trade he or she is always long one currency and short the other. For example, if a trader sells one standard lot (equivalent to 100,000 units) of EUR/USD, she would, in essence, have exchanged euros for dollars and would now be short euro and long dollars. To better understand this dynamic, let’s use a concrete example. If you went into an electronics store and purchased a computer for $1,000, what would you be doing? You would be exchanging your dollars for a computer. You would basically be short $1,000 and long 1 computer. The store would be long $1,000 but now short 1 computer in its inventory. The exact same principle applies to the FX market, except that no physical exchange takes place. While all transactions are simply computer entries, the consequences are no less real.

Great Returns in Currency Trading

The opportunities for unmatched returns and investment protection in the brave new world of foreign currency investing are second to none. In Foreign Currency Trading, financial executives Russell Wasendorf, Sr., and Russell Wasendorf, Jr., describe foreign currency trading in plain terms, and help you understand the risks, benefits, and operational requirements that you will need to take advantage of this markets tremendous potential. Look to Foreign Currency Trading for clear explanations on the mechanics of foreign currency trading, in-depth discussion of all pertinent foreign exchange rules and regulations, and a comprehensive glossary with literally hundreds of terms essential to forex trading. With formerly imposing currency trading restrictions having been struck down in recent court rulings, the world of foreign currency trading is an exciting and rapidly-expanding field.

Tags: Acquisition Activity, Computer Entries, Concrete Example, Consequences, Currencies, Currency Market, Currency Trading Tips, Electronics Store, Exchange Currency, Financial Institutions, Fx Market, Geopolitical Events, Hedge Funds, Market Volume, Merger And Acquisition, Multinational Corporations, Pairs, Payroll Payment, Short Answer, Speculative Market

Forex Trading And Pricing Explained

April 13th, 2010 No Comments

I received the following question from one of my list members today:

“… you referred to the currency exchange cash market and the fact that this is basically a market between banks across countries. Does this mean that, for example, the EURO/USD exchange rate is set between the Federal Reserve and the ECB? Is that how a price is established without the benefit of any trading on any listed exchange anywhere else? Thanks for the brief education on this particular point.” – Stan Z.

The forex spot market is primarily an “interbank” market. That means the majority of the trading volume is done bank-to-bank such as between Citibank and Goldman Sachs, for example. This trading is generally done on behalf of banking customers such as multinational corporations, though the banks also trade with each other both to hedge their currency exposure and to take on trading positions.

This sort of market structure is the same as the one for most cash market government debt trading, such as that for US Treasury Bonds and the like. You can think of it like the over-the-counter market for stocks. Those trades don’t go through an exchange, but are done directly broker-to-broker.

In both forex and fixed income there are big players like hedge funds that take part along with the commercial and investment banks. The world’s central banks are also major participants at this level in their attempts to influence exchange rates (forex) and/or interest rates (fixed income).

The transaction sizes in the interbank market are large – generally $5 million and up. Obviously, the average individual trader is not going to be trading anywhere near that big. That’s where the online brokers and forex dealers come in to play. They allow small traders to do transactions in significantly lower amounts. In fact, there is at least one which will do trades as small as $1.

Here is where some folks get a bit nervous. Many of these forex dealers actually act as market makers with their clientele. By that I mean they take the other side of the trades that are done by their customers. This is something which can sometimes happen in the stock market as well, especially with OTC stocks. The concern that folks have with this is the implied conflict of interest in terms of price execution that creates. Is a dealer who will be taking the other side of your trade going to be acting in your best interest when you put on a trade?

While it may be true that some unscrupulous dealers may take advantage of their customers in that way, I am quite confident that most of them are not acting against their customers. They simply provide liquidity to the market and earn the spread to do so. When they have an excessive exposure to any particular currency, they offset it by hedging in the interbank market or with another dealer. That’s basically the same as a floor trader on any exchange.

Getting to the question of how prices get set, the market does that, not the central banks. Each individual bank and dealer is actually setting its own price. That might sound a bit strange in that it would create different rates all over the place. The fact of the matter is, however, that prices between dealers and banks are almost always going to be very, very close. There are services such as Reuters where dealer prices are aggregated and presented in data feeds, allowing everyone to know the current (and historical) market rates. Arbitrage trading keeps dealers from quoting prices too far away from each other.

There is also trading in the futures market, and the relatively new currency exchange traded funds (ETFs). The activity there, while only a small fraction of the global market volume, also contributes to keeping prices in line across the board.

Tags: Central Banks, Citibank, Currency Exchange, Currency Exposure, Euro Usd Exchange Rate, Exchange Cash, Forex Dealers, Goldman Sachs, Government Debt, Hedge Funds, Interbank Market, Investment Banks, Market Structure, Multinational Corporations, Online Brokers, S Central, Small Traders, Transaction Sizes, Treasury Bonds, Usd Exchange Rate

Forex trading an overlooked but very lucrative market.

April 11th, 2010 No Comments

One of the most appealing ways to attain wealth is to play the stock market. With the advent of the Internet and on line brokers traders have seemingly unrestricted access to various trading products that just 10 years ago were reserved for big financial institutions. A trading product that has been overlooked by many traders is forex.

Forex is derived from the words FOReign EXchange and involves the trading of currencies. Until relatively recently trading forex has been the preserve of banks and other large financial institutions. In the last 5 years forex trading has literally exploded among ordinary traders. When the advantages of forex trading become apparent this is not surprising. The forex market is the largest financial market in the world with an estimated daily turnover of $1.5 trillion dollars. This is 30 times larger than all the US stock markets combined. Further more the forex market is open 24 hours a day 5 days a week.

The size of the forex market is one of its first benefits. The forex market is very liquid and has high volume. Liquidity is a great asset many traders look for because it means a deal can always be done. Forex is a continuous 24-hour market. This is very desirable if you wish to trade part-time as you can choose what time you trade unlike stock markets that are open only 8 hours a day. This 24-hour market almost removes the problem of gapping. Because most stock markets are only open 8 hours a day often-overnight events can cause stocks to gap up or down. Large gaps can especially cause large losses for people who trade derivative products like futures or options. In the forex market the problem of gapping is very much reduced.

Currencies are always traded in pairs. Usually currencies are traded in pairs against the US dollar. The main pairs are US dollar Vs EURO ( EUR), British Pound (GDP), Swiss Franc (CHF), Japanese yen (JPY), Australian Dollar (AUS), New Zealand Dollar (NZD) and the Canadian dollar(CAD). There are other currencies pairs but most traders prefer to trade the pairs above. These currency pairs are known as the majors. Currency traders have plenty of trading opportunities from these 7 major currency pairs. Compare this against the stock market where more than 8,000 stocks trade on the three primary US stock exchanges and currency traders can focus just on these 7 pairs and still make plenty of money.

Unlike the stock market there is never bullish or bearish market conditions. Currencies go up or down against each other according to how the world financial markets perceive the value of the currencies. You can sell a currency (go short) just as easy as you can buy a currency( go long). Currencies go up and down and you can trade either direction just as easily ensuring there is always plenty of trading opportunities.

Forex brokers dont charge commission or brokerage. This can be quite a large overhead in other financial markets. Forex brokers make their money on the difference between the bid/ask spread of a currency pair. As the forex market is very liquid the spread between the bid/ask is very small. As many stock traders know brokerage can be a significant transaction cost.

You can start trading forex for as little as $300 dollars. There are two types of accounts a mini forex account and regular forex account. Most forex brokers offer 100: 1 leverage which means a in a mini account you can control $10,000 currency position with $100. In a regular account $1000 controls a $100,000 currency position. This provides great leverage and an extremely efficient use of trading capitol.

Trading a mini account is a great way on how to learn to how to trade forex. When you paper trade you are having a comfortable armchair ride. You are trading without the emotions of putting real money on the table. When you trade a 1 mini currency lot you can set your stop loss so the most you lose is $100. This is a great way to learn how to trade effectively without risking much money. In most other trading products even when trading with the smallest trading lot possible you would have to risk much more. Forex provides trading opportunities for people without much trading capitol.

Many traders have overlooked forex trading. It has many benefits that all
traders can use to their advantage. It offers the benefit of trading 24 hours a day in any country in the world. The forex market is a very lucrative market no trader can overlook it.

Tags: Advent Of The Internet, Australian Dollar, Canadian Dollar, Derivative Products, Financial Institutions, Foreign Exchange, Forex Market, Gap, Gapping, Japanese Yen, Liquidity, Lucrative Market, New Zealand Dollar, Nzd, Open 24 Hours, Overnight Events, Stock Market, Stock Markets, Swiss Franc, Trading Forex

Use our currency rates for your forex and currency trading needs

Archive for April, 2010

Forex Trading Demystified

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Forex Trading And The Obsession To Win.

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Forex Trading And Pricing Explained

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Forex trading an overlooked but very lucrative market.

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