FOREX TRADING

If you’ve been involved in the investment world for any length of time, I’m sure you’ve heard the term Forex thrown around, but what exactly is Forex?

Forex stands for FOReign EXchange. In the simplest of definitions, it is the simultaneous buying and selling of a currency pair (e.g. EUR/USD), hence the term currency trading. It is a continuous physical occurrence taking place in the global economic system.

For example, when a tourist travels from Europe to the USA and exchanges euros for dollars, he becomes a potential trader of Forex.

Similarly, when a US company needs to exchange dollars before exporting goods to Europe or Japan, it too takes an active role in the foreign exchange market.

With this in mind, every currency pair has a price which is determined by the law of supply and demand, globally. If the demand for a particular currency is high then it gains value. Conversely, if a currency is in abundant supply, its value declines.

Currently, Forex is the most liquid of all markets with trading volumes surpassing the 3 trillion dollar mark, every single day. To put things in perspective, this is more than the NYSE and the NASDAQ combined!

Until recently, currency trading was confined to banks and large financial institutions. However, since the advent of the internet, many OTC brokerage firms have sprung up allowing the everyday trader, or speculator, to actively participate in this market.

Due to its large trading volumes, Forex has become a very popular investing opportunity. The potential for profit is enormous, but as with anything involving large gains, the risks are equally amplified. This is what makes this type of investment so attractive to some, whereas others clearly shy away from it.

A thorough evaluation of the system’s inner workings must be undertaken by anyone who’s hoping to profit from Forex. This involves sound education, discipline, and most of all practice.

With these three things combined, and the right mentor, anyone can learn to consistently make money from the frequent and often “wild” swings, of our global economy.

To learn more about how you can start profiting from Forex trading, be sure to read the rest of the articles in this section.

These are some forex basic forex terms that cause a lot of confusion to amateur forex traders. We will try to give simple and practical definitions.

Margin practically is the money you have deposited in order to trade. If your money is depleted then you may have not sufficient margin in order to trade.

Leverage is called the factor that mupltiplies your margin in order to realize more profits from your trade. When a broker offers a leverage e.g. 400:1 this means that for every dollar in your trading account you can trade 400 dollars due to temporary borrowing of money from the broker for as long as your trade lasts. For example if you deposit 1000 dollars in a trading account with leverage 100:1 this means that you can practically trade as if you had 100,000 dollars. This is very important in Forex because you trade the last decimal change in the currency pair value so you need a large amount of money in order to realize a decent profit.

When you buy you are “long” in Forex language. When you are long you want the currency pair to appreciate in order to make profit. Long positions are profitable when the market is bullish that is the direction of the trend is upwards. When you sell you are “short”. When you are short you want the currency pair to depreciate in order to make profit. Short positions are profitable when market is bearish that is the direction of the trend is downwards.

The last digit of the price in a currency pair is called pip. In EUR/USD 1.2640 the 0 digit is called pip. More specifically the change of the last digit in one unit is called one pip change. The pip numbers in Forex is the indicator of your profit or loss. In Forex you trade the last decimal change in the price of currency pair.

A limit order is an order to trade a currency at a specific value either short or long. This order remains valid for as long as you want until the currency reaches the value that you have specified. Stop loss is an order to exit a trade at a specific currency value according to risk appetite. With stop loss you can minimize you losses. Limit and stop orders can automate your trading without the need to be in front of the screen all the time.

Forex trading online is a fast way to use your investment capital to
it’s fullest. The Forex markets offer distinct advantages to the
small and large traders alike, making Forex currency trading in many
ways preferable to other markets such as stocks, options or
traditional futures. Here are many reasons why you’ll want to look
into Forex Trading online.
1 - Forex is the largest market.Forex trading volume of more than 1.9 billion, more than 3 times
larger than the equities market and more than 5 times bigger than
futures, give Forex traders nearly unlimited liquidity and
flexibility.
2 - Forex never sleeps!You can execute forex trading online 24/7, from 7AM New Zealand time
on Monday morning, to 5PM New York time on Friday evening. No waiting
for markets to open: they’re open all night! This makes Forex trading
online a very attractive component that fits easily into your day (or
night!)
3 - No Bulls or Bears!Because Forex trading online involves the buying of one currency
while simultaneously selling another, you have an equal opportunity
for profit no matter which direction the currency is headed. Another
advantage is that there are only around 14 pairs of currencies to
trade, as opposed to many thousands of stocks, options and futures.
4 - Forex trading online is commission free!That’s right! No commissions, no exchange fees or any other hidden
fees. This is a very transparent market, and you’ll find it very easy
to research the currencies and the countries involved. Forex brokers
make a small percentage of the bid/ask spread, and that’s it. No
longer any need to compute commissions and fees when executing a
trade.
5 - Forex trading online is instant!The FX market is astoundingly fast! Your orders are executed, filled
and confirmed usually within 1-2 seconds. Since this is all done
electronically with no humans involved, there is little to slow it
down!
Forex trading online can get you where you want to go quicker and
more profitably than any other form of trading. Check it out and see
what Forex trading online can do for you!

what exactly is forex ..?
The currency trading or foreign exchange, Forex, FX market is the biggest and one of the fastest growing market in the world. with daily turnover of almost 3 trillion dollars the participants in the market are central and commercial banks, institutional investors, corporates and private individuals like you.

How currencies are traded..?
In forex market, currencies of various countries are traded. for example you might buy euro with us dollar, or you might sell canadian dollars for japanese yen. its as basic as trading one currency for another. here you dont have to purchase or sell actual, physical currency, you trade and work with your own base currency and deal with any currency pair you wish to.