The Basics of Forex Trading
The term Forex refers to foreign exchange. Hence, forex trading is currency trading with an objective that the value of the currency will appreciate in the future. For instance, if you speculate that the value of the US Dollar will increase in a few days, it would be advisable for you to buy Dollars now and enjoy the benefits when the Dollar appreciates.
Hence speculative forex trading is the purchasing of a currency with the hope that its value will increase in the near future. When you go to the bank with 500 Dollars and change it into Pounds; you will be buying Pounds from the bank and selling the bank Dollars. Same applies to forex trading where you buy and sell currencies at their respective rates, and it is referred to as trading a currency pair.
What you need to grasp next is the value of the Pound in comparison to another currency.Two trades could be placed be it buying the YEN against the Pound and selling the YEN against the Dollar. This is referred to as a hedge trade. There are many currency pairs that you can combine and opt to trade within hedge forex trade arena. When it comes to speculative trading, you do not hold onto the currency for a long time. Once a specified currency has appreciated or depreciated, and trade is complete, the currency is given up.
Various companies have adopted forex trading that analyses the market while setting the values of all currencies. This mode of forex trading provides a better foreign exchange trading via the internet interface.
Forex market is known to be the largest and highly liquid market in the world. It may be a risky venture to go into Forex trading due to the volatility and fluctuations in the market. The only way to minimize the risks involved is proper planning and ample research on the currency movements. The exchange is an over the counter venture where the traders and brokers carry out their transactions without a clearing house being present.
Some of the terms used in Forex trading include bid price, offered price and the spread. A bid price refers to the selling quote while the buying quote is the price offered for the bid. The difference between the bid price and the offered price is referred to as the spread.
A broker is like a third party among the trading parties. Most of the brokers have furthered their trade through the internet where the traders offer their bids online. Security and anonymity are assured. When the final bid is placed, they show the highest quote while charging a fee for their services. Some of the leading online forex brokers are etoro.com and easy-Forex.com.
Sign up with an Online Forex Broker:
We have listed the best recommended forex online trading platforms. You are only a few minutes away from opening your own free trading account. You can make a lot of money in the Forex business. Get a piece of the $4.100.000.000 traded daily.
You can always start with a free demo account. Easy trading platforms. Free 24/7 Support. Multiple language support. Start make some money today! Recommended hobby or full/part time job.
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About eToro trading platform:
eToro is committed to delivering a uniquely rewarding trading experience to all of our clients. Our simplified approach to trading and investing offers you the use of the fastest and most intuitive trading platforms you’ll find anywhere and our social trading network offers you the opportunity to harness the collective wisdom of our entire trading community – that’s more than 2 million traders for you to learn from, interact with and even copy. We offer all you need to be a successful trader as part of our connected global investing community. Get all the tools you need to succeed and maximize your trading potential. We’re more than just the world’s largest investment network: we’re your investment network.
About Plus500 trading platform:
Trading at Plus500 is straightforward and easy with no commissions or hidden fees. Plus500 is compensated for its services through the bid/ask spread. Our trading platform lets you buy any financial instrument listed on our website and sell it as quickly as a couple of seconds later.
The main lobby of the software contains the buy/sell prices of all the instruments available. When entering an order to buy an instrument, the advanced trading platform allows you to add a stop loss, profit limit or trailing stop to protect your position – and profits.
About Easy Forex trading platform:
Since 2003, easy-forex has been revolutionizing currency trading in over 150 countries.
A pioneer in developing Forex as a consumer product, easy-forex continues to lead with customized technology and personal service tailored to all levels of traders.
With one easy-forex account, traders can trade currencies and commodities using their web, desktop or mobile platforms. Personalized FX training programs, Dealing Room specialists, rewarding Introducing Broker programs and innovative Institutional Partner offerings are just some of the reasons why thousands of traders choose us every year.
Licensed in Australia, EU and USA, easy-forex has multiple offices around the world, from Chicago to Sydney.
About AvaTrade trading platform:
At Ava FX, you, the trader, are the center of our universe. As a result, we offer a list of advantages that are uniquely suited to your needs.
What is Forex?
Forex is the acronym for Foreign Exchange. It is the market place where the currencies of the world are traded. The Forex market is also regarded as the largest market in the world with a daily turnover of around 4 trillion dollars. This is thrice the size of the combined US equity and Treasury markets. The Forex market is also unique when compared to the other financial markets as it has no centralized or physical location. It is just a network of banks, financial institutions, hedge funds, corporations and retail traders buying and selling currencies with one another. Because of this unique characteristic, the Forex market is not bound by a single time zone. It operates on a 24 hours timeline from one time zone to another where all the major financial centers are located.
To make money on Forex trading, you can either take a long market position or go short on your market position. By going long, you are buying a currency pair and hoping to sell it later at a higher rate and thus profiting from the differences between what you paid for and what you got from selling the currency pair. Going short is the opposite scenario. In this situation, you will be selling a currency pair at the current market rate and hope to buy them back later at a lower rate. This is one of the main attractions of the Forex market. You can profit from the market regardless if it is a bull or bear market. As long as you can predict which direction the market is heading, you can position yourself to take advantage of the market trend. Within the forex capital markets you have a variety of brokers to choose from.
Tips for new Forex traders
With around 4 trillion US dollars worth of currencies traded daily, the Forex market is the largest financial market in the world. It is an extremely exciting business to be in as it provides a simple way for both the traders and investors to build up profits rapidly. Nevertheless, for those new to the Forex market, it is crucial to know exactly what you are getting yourself into. You should not deal in the Forex market if you are clueless as to what the Forex market entails. Despite having said this, we still countless novice traders repeating the same mistakes over and over again. Some of these common errors that the make include:
• Not embracing the correct outlook toward trading in the Forex market.
• Not having the right attitude
• Unable to differentiate the significances of the different currencies traded.
• Having poor management of their trading as well as implementation of their trading strategy.
Forex can be risky, don’t invest more than you can afford to lose.