Trading Forex is an exciting way to make heaps of money. Today there are many good trading systems being offered online. Before you look at Currency Forex Market Trading it is important to have a basic understanding of what it is.
Lesson 1.
What is Currency Forex Market Trading?
The Foreign Exchange Market also known as Forex or Fx Market is the Spot (cash) market for Currency. Every day over 3 Trillion Dollars are being traded. This is over 30 times larger than the combined volume of all the US Equity markets (before the downturn in the share market). Forex plays a vital role in the world economy, as the main players banks, companies (exporting and importing products around the world) and traders are buying and selling currencies 24 hours 6 days a week.
The Market opens 7.00 am Monday morning New Zealand time and closes 5.00pm Friday evening New York time. There is no central trading floor and all the trading is done electronically with the main dealers based in London (the Trading capital), New York, Hong Kong/Singapore, Sydney and Tokyo.
As a Forex Trader you will be buying and selling one currency for another. If you are buying you are expecting the value of that currency to rise, if you sell you are expecting the value to drop. Forex currencies are always traded in pairs; this simply means that if you sell one of the pairing you are in effect buying the other currency in the pairing. The pricing of the currency is shown as how many of the counter currency is worth 1 of the base currency.
Let me give you an example. One of the most popular pairs is the European Euro and the American Dollar. The quote for that pairing might be EUR: USD 1.3901, this means 1 Euro is worth 1.3901 American dollars. In a currency pairing the 1st currency (EUR) is the base currency and the 2nd currency (USD) is the counter or quote currency. We will go into more depth in one of the later articles; today we are explaining what Forex Trading is and some of the benefits associated with it.
Why Trade Forex?
• It is a 24 Hour Market, open 6 days a week. There is no waiting to open in the morning unable to trade while you are losing money.
• It is the largest market and can absorb huge trades.
• There is no Bear market as there is in the stock market. Because you trade 2 currencies simultaneously, buying one means selling the other currency, therefore no matter which way the market is going one of the currencies is going up. Again we will use the EUR: USD pairing for an example. If the EUR drops in value the USD will go up and if the EUR goes up the USD will go down in value.
• High Leverage. Because of the high levels of liquidity the Brokers normally offer up to 200:1 leverage. Some will go up to 400:1. This means with a leverage of 100:1 a standard Lot of $100,000 can be traded with a 1% margin of $1000.00. There are mini accounts that allow $50 to control $10,000.
• Price movements are seen as predictable. The currency trading charts have been studied for over 100 years and although they are volatile the cycles seem to repeat themselves and create trends which when using technical analysis are easier to predict than other markets.
• Commission free trading. Brokers will advertise that they do not charge commission, however they do charge spreads, this is the difference between the bid/ask price. In other words the difference between what you buy for and the price you get if selling.
• Trading Forex you get instantaneous order execution, all orders are electronic and because trading is via the internet platforms most orders are immediate.
Currency Forex market Trading is now available to the smaller Trader. You do not need $100,000's to start trading but you do need a plan, strategy and a reliable system. Good luck with your Trading.
Lyndsay is a successful entrepreneur, author and forex trader. Discover how you can get the best proven forex system and start trading successfully today. For the #1 forex system available check out http://www.best-fx-trading.com/
Lesson 1.
What is Currency Forex Market Trading?
The Foreign Exchange Market also known as Forex or Fx Market is the Spot (cash) market for Currency. Every day over 3 Trillion Dollars are being traded. This is over 30 times larger than the combined volume of all the US Equity markets (before the downturn in the share market). Forex plays a vital role in the world economy, as the main players banks, companies (exporting and importing products around the world) and traders are buying and selling currencies 24 hours 6 days a week.
The Market opens 7.00 am Monday morning New Zealand time and closes 5.00pm Friday evening New York time. There is no central trading floor and all the trading is done electronically with the main dealers based in London (the Trading capital), New York, Hong Kong/Singapore, Sydney and Tokyo.
As a Forex Trader you will be buying and selling one currency for another. If you are buying you are expecting the value of that currency to rise, if you sell you are expecting the value to drop. Forex currencies are always traded in pairs; this simply means that if you sell one of the pairing you are in effect buying the other currency in the pairing. The pricing of the currency is shown as how many of the counter currency is worth 1 of the base currency.
Let me give you an example. One of the most popular pairs is the European Euro and the American Dollar. The quote for that pairing might be EUR: USD 1.3901, this means 1 Euro is worth 1.3901 American dollars. In a currency pairing the 1st currency (EUR) is the base currency and the 2nd currency (USD) is the counter or quote currency. We will go into more depth in one of the later articles; today we are explaining what Forex Trading is and some of the benefits associated with it.
Why Trade Forex?
• It is a 24 Hour Market, open 6 days a week. There is no waiting to open in the morning unable to trade while you are losing money.
• It is the largest market and can absorb huge trades.
• There is no Bear market as there is in the stock market. Because you trade 2 currencies simultaneously, buying one means selling the other currency, therefore no matter which way the market is going one of the currencies is going up. Again we will use the EUR: USD pairing for an example. If the EUR drops in value the USD will go up and if the EUR goes up the USD will go down in value.
• High Leverage. Because of the high levels of liquidity the Brokers normally offer up to 200:1 leverage. Some will go up to 400:1. This means with a leverage of 100:1 a standard Lot of $100,000 can be traded with a 1% margin of $1000.00. There are mini accounts that allow $50 to control $10,000.
• Price movements are seen as predictable. The currency trading charts have been studied for over 100 years and although they are volatile the cycles seem to repeat themselves and create trends which when using technical analysis are easier to predict than other markets.
• Commission free trading. Brokers will advertise that they do not charge commission, however they do charge spreads, this is the difference between the bid/ask price. In other words the difference between what you buy for and the price you get if selling.
• Trading Forex you get instantaneous order execution, all orders are electronic and because trading is via the internet platforms most orders are immediate.
Currency Forex market Trading is now available to the smaller Trader. You do not need $100,000's to start trading but you do need a plan, strategy and a reliable system. Good luck with your Trading.
Lyndsay is a successful entrepreneur, author and forex trader. Discover how you can get the best proven forex system and start trading successfully today. For the #1 forex system available check out http://www.best-fx-trading.com/
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