Forex trading is becoming more popular as time goes by. Perhaps you have heard of forex trading, or heard things such as “the dollar fell sharply against the yen”. Not sure what all this means? Here is a basic overview of forex trading.
The foreign currency exchange market (forex) is the largest market in the world. Much larger than the stock market! Some of the reasons for its popularity are that leverage allows maximum usage for your money and there is very high liquidity. The forex market is also open 24 hours a day, although some hours are much better trading times than others.
Forex is traded on margin. This means that you can control a large amount of money for a small bit of cash. With a 1% margin, $1000 in cash would leverage you one hundred thousand in the forex market trading. What this basically means is that your rate of return (or ROI) is going to be 100% for each percentage change upwards. Of course, this means that your loss would be equally as great if the market went against you.
Forex trades are always done in pairs. You always purchase one currency at the same time as you sell another. While there are many pairs in the forex market, there are really four major currency pairs: USD/JPY, USD/GBP, GBP/USD and USD/CHF. These pairs see the most market activity.
When you work with forex trades, you do not pay a commission fee per trade, unlike the stock market. What you do pay is a spread. That is the difference between the asking rate and the bid rate of the currency pair. The spread is determined by the trading company you work with. The spread is how they make their money. Be careful in trading, as some brokers will increase the spread during big news breaks (such as non farm payroll announcements), or during off peak hours.
Since you are buying and selling currencies at the same time, it doesn’t matter whether the market is up or down. You can make money either way. For example, if the GBP/USD is going up, it means the pound is stronger than the dollar. If you think good economic news is coming for the dollar, you may want to sell the GBP/USD and buy USD/GBP.
Price quotes are based on pips – which is the smallest unit that a pair can trade at. It is the very last number on the right of a quote. For example if a currency bid is 1.0345 and the ask is 1.0347 – the difference is equal to 2 pips. This is the spread that was mentioned earlier.
There are two types of forex traders, those that are technical traders and those that are fundamental traders. Technical traders base their trades on a lot of different statistics and parameters. Viewing past patterns the currencies form will give a technical traders strategies on which pairs to buy or sell. Technical traders don’t necessarily take news into consideration and often don’t trade during big news breaks. Fundamental traders work only with news. They have a calendar marked with big market news days, such as job numbers, consumer confidence, retail sales, etc. They then plan their strategy to buy and sell based on what those numbers are predicted to be.
If you are interested in learning more about forex, there are many website with free training available, or you can purchase courses to learn. Take the opportunity to open a free ‘game’ account, such as at oanda.com – and practice trading whichever strategy you want to follow until it becomes second nature. This is a great tool before you actually put real money into the market!
i think that you introduced the forex market verry well, but for newbie who never been in the forex market he should be aware that the forex market is not an easy market to deal with it and he should read and read more about this market before he invest in there
cheers
godd forex article, this srticle make me understand about forex and give advantage for forex beginner like me
he should be aware that the forex market is not an easy market to deal with it and he should read and read more about this market before he invest in there
cheers
For my own opinion, I still think it is a bit risky for newbie to join the forex market without the guide of an expert.
this is a good information about forex, thanks for the information in this article.
Detailed article on forex trading.It clearly explains the forex trading in detail and it is very useful for the beginners.
I think tis article is a good clue for people who interesting in forex
The foreign currency exchange market (forex) is the largest market in the world. Much larger than the stock mark. But , please be aware that the forex market is not an easy market to deal with it and should proper knowledge , before investing here..
wow thanks for this!Im still learning how to work on forex and this is the good one article on this blog!thanks!
this is a good topic
Good post, well written and informative. Forex trading was not always something I could understand.
Thanks for the information.
very good article which has lot of information about forex trading.
You have a well written article and it is very easy to understand. I am trying to be in forex business and your article is giving me some great tips. Thank you.
This gives a very good introduction about the Forex basics,would be very helpful for a beginner,Thanks.
A foreign exchange market helps businesses convert one currency to another
should I use books to be an expert in forex ??
how to get started where there is the link to start forex do you think is best?
The article gives a clear idea for new comers stating that forex trading is not so esay to deal with but need not worry if u read the above article it makes very clear that no need to worry that ur a newbie becoz many experinced people are thier who can provide you training not only that even u can make a deal with demo accounts so practice makes you better to deal before you enter with real money in market really great post which has some best quality guidelines thanks for the post
Finally I have found such an interesting article about Forex. I didn`t know much about FOrex but now you made me more experienced.