Home
Forex News
Forex Articles
Blog
Forex Daily Outlook
Forex Weekly Outlook
Trading Platforms & Tools
Other Resourses

report

Sign Up to get the FREE
Forex Start Report.

The Beginners Guide ToCurrency Trading

Your email is
safe with us...
we HATE SPAM!

 

Email:
Name:
 

Forex News Summary xml

 



Sponsor

 

home contact site map


What is Forex Trading?



By Dick Web

FOREX, (FOReign EXchange market) or FX, is an international exchange market where stocks and shares are not traded, but currency. The return for the investor is not in the value of the currency per se, but rather the relative exchange value of one currency against another currency. Therefore, Forex trading is always expressed in pairs such as Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

By simultaneously buying and selling pairs of currencies, the investor, or speculator, hopes to profit from a favorable exchange rate change. Unlike the American stock exchanges, the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ), Forex trading is more predictable than stocks.

One strategy that the Forex investor uses is a technique that stems from the assumption that all information about the market and a particular currency's future fluctuations is found in the price chain. In other words, an investor simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before. Another strategy for the Forex investor is to analyze the country of the currency's economy, political situation, and other possible rumors. The investor can also anticipate such things as political unrest or change that will also have an effect on the market.

Forex is the largest financial market in the world handling between 1.5 and 1.9 trillion US dollars a day. The combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors. Because of the the liquidity of the market, unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.

What are the risks?

Because of the sheer scale of the Forex Market, it ensures greater price stability and greater leverage. Also, with built-in protections such as safety margins, automatic limits for buying and selling, and other risk protection measures, the likelihood of ending up in the red even when the Forex market is volatile is drastically reduced. Furthermore, because of its' size, it is near impossible for a single investor to significantly affect the price of a major currency.

However, all Forex traders should be aware that the market is one of the most liquid around and subject to strong currency trends. While leverage figures of up to100:1 are possible, without adequate risk protection in place the gap between profit and loss can be dramatic. Even veteran Forex traders can be caught out from time to time and take large hits. With this type of investor speculation, the golden rule must be: don't risk more than what you can afford to lose.

Dick Web is an experienced forex trader and has made a lot of money with his . He contributed this article to the Forex Trading Guide. Visit the Forex Trading Guide at
Provided By:

 

Do you have a comment or something to add to the above article ? Please do so here.
We hate SPAM, all atempts will be reported

Name:
URL:
EMail:
Comment:
Confirm image:
 
CAPTCHA
 

Forex Related Articles

  • Currency Trading On A Margin
    The overall sucess of the FOREX market is made possible today because of margin. Without this important principle, the average investor would not be able to participate in FOREX at all. So what is margin...
  • Don't Rush Into Forex Trading
    Once I starting enjoying making profit on the forex market, the word got out, everyone I know started asking me if I would teach them about the world of forex trading. This is what I tell them:The first...
  • A Mini-Guide To The Managed Forex Account
    A managed forex account is forex made easy. It is especially tailored for those investors who do not have the time or desire to monitor their own forex account. Many different companies offer these accounts...
  • Where to Get Forex Training
    For those of you who are interested in forex trading, you may want to start off by getting some good forex training. Forex training is a necessity for anyone with this interest. This is because a lot of...
  • What Is A Mini Forex Account?
    Nowadays many people around the world is looking for entering the world of Forex trading due to its very high profitability potential and many other advantages the Forex market has over other capital markets.But...


AccountForex © copyright 2006 | Privacy www.accountforex.com