Have you ever exchanged currency to go on a trip? If you have, whether you knew it or not, you were trading Forex.
What is foreign exchange trading?
Foreign exchange consists of trading one type of currency for another. The foreign exchange market, also known as the Forex or FX market, is the world’s largest market, operating 24 hours a day, with enormous amounts of money, almost one trillion, traded on a daily basis. As investors become more knowledgeable the market continues to grow. Unlike other markets, the forex market has no physical location and no central exchange. It operates through a global network of banks, corporations and individuals trading one currency for another in an over the counter fashion. Unlike any other financial market investors can respond to currency fluctuations at the time that they occur, without having to wait for the exchanges to open. Access to modern services including news services, charting services, 24 hour dealing desks and sophisticated online trading platforms has allowed the forex market to explode, particularly for the individual trader. There is a massive reward potential for the successful trader, but you do have to keep in mind that every successful trade is balanced by a oss somewhere else.
How does it work?
Forex trading is typically done through a broker. As a forex trader you can choose a currency pair that you expect to change in value and place a trade accordingly. Orders can be placed with just a few clicks and the broker than then pass along the order to fill your position. When you close your trade the broker closes the position and credits your account with a loss or gain. This can all happen within a few seconds.
Before jumping aboard the forex train it is probably a good idea to learn as much information about the market as you can. Research brokers to determine who you will work with. If you choose one of the bigger banks you’ll find they offer a wealth of knowledge to help you get started. In addition it is a good idea to get online and join forex discussion groups, forums and to read blogs. This will help you learn how to spot the market trends that will help you to be successful. A good place to start researching would be on a website like ForexCurrency.us. You can find a lot of useful information tools and tutorials on their website, as well as advice on choosing a broker and getting started.