| What is Forex Trading?
| |
| | a rising or a falling market.
|
| Forex, or Foreign Exchange, is the
| |
| | Trends. Fundamentally, the value of a
|
| simultaneous exchange of one country's
| |
| | country's currency is determined by
|
| currency for that of another. This market
| |
| | interest rates and the strength of the
|
| of exchange has more daily volume, both
| |
| | economy in relation to other countries.
|
| buyers and sellers, than any other in the
| |
| | Currencies, therefore, have a greater
|
| world. Taking place in the major
| |
| | tendency to trend until the fundamentals
|
| financial institutions across the globe,
| |
| | change.
|
| the forex market is open the full
| |
| | What are the disadvantages of forex
|
| 24-hours a day. Forex currency trading
| |
| | trading?
|
| takes place around the world, across the
| |
| | Leverage can be a two headed sword. With
|
| time zones of the globe.
| |
| | huge leverage available to forex traders
|
| You should know that currencies are
| |
| | the danger is that positions which carry
|
| quoted in pairs. The first listed
| |
| | too much risk for the account size can be
|
| currency is known as the base currency,
| |
| | taken on, leading to margin calls.
|
| while the second is called the counter or
| |
| | Effective money management rules must be
|
| quote currency
| |
| | adhered to.
|
| In the wholesale market, currencies are
| |
| | Brokers. Retail traders must use a broker
|
| quoted using five significant numbers,
| |
| | rather than dealing directly in the
|
| with the last placeholder called a pip or
| |
| | interbank market. The broker will be the
|
| the point.
| |
| | counterparty in all transactions and is,
|
| The forex market has become the most
| |
| | effectively, making the market. They can,
|
| popular of markets for speculation due to
| |
| | therefore, widen spreads or even refuse
|
| its enormous size, liquidity, and
| |
| | to trade during volatile trading
|
| tendency for currencies to move in strong
| |
| | conditions. To avoid dealing with brokers
|
| trends. A most enticing aspect of trading
| |
| | an alternative to forex is to use
|
| currencies is the high degree of leverage
| |
| | futures.
|
| available.
| |
| | Spreads. As the retail trader must use a
|
| What are the advantages of forex trading?
| |
| | broker to trade, they cannot deal at the
|
| Leverage. Huge leverage is available in
| |
| | interbank rates. A broker will generally
|
| Forex trading, often up to 100:1 meaning
| |
| | quote a fixed spread of 3-20 pips
|
| that large profits can be generated from
| |
| | depending on the currency pair. The
|
| even small margin deposits.
| |
| | underlying interbank rate might be as
|
| Liquidity. The enormous size and global
| |
| | little as 1 pip.
|
| trading of the forex markets means that
| |
| | Forex is a very large market but for most
|
| the markets in the major currency pairs
| |
| | retail traders dealing with brokers the
|
| are very liquid making trade executions
| |
| | odds are shifted against them. Online
|
| almost instantaneous with little
| |
| | futures trading provide a much more level
|
| slippage. This is due to a great extent
| |
| | playing field for most traders who want
|
| to the rapid communication systems that
| |
| | to take part in forex trading.
|
| are available worldwide.
| |
| | Forex or Currency trading can be an
|
| Ability to go short. Since currency
| |
| | exciting way to make your fortune.
|
| trading always involves buying one
| |
| | Prepare and understand the concepts and
|
| currency and selling another, there is no
| |
| | risk factors involved.
|
| structural bias to the market. This means
| |
| | Remember that a knife can cut both ways ?
|
| a trader has equal potential to profit in
| |
| | for you or against you .
|
