Introduction To Forex Trading
An Introduction to Forex Trading
I'm sure you've already heard of Forex trading. It is certainly one of the hottest topics around these days. But what exactly is it, and how can the average person make good money in Forex?
Forex, also called "FX", is short for foreign exchange. The foreign exchange doesn't get the big press like stocks, options, and commodities. But the foreign exchange is the biggest market in the world and it offers investors an incredible opportunity for profit.
When you trade on the foreign exchange, you don't trade in stocks or bonds, but in currency.
Simply put, Forex trading is just the buying of one currency and the selling of another. As exchange rates go up and down, you either make or lose money.
With Forex, you're not investing in a single company or even a group of companies. You're investing in the economy of nation. You are betting that the overall economic health of one nation will improve in relation to that of a second nation.
For example, let's say you are analyzing the US Dollar and the Japanese Yen. Your research seems to indicate that the US dollar is undervalued and is due for a rise in price, and at the same time you expect the Japanese Yen to lose value.
In this case you would execute a trade to buy US dollars and sell Japanese yen.
If you are correct and the exchange rate rises, you make a profit!
So its a cinch, right?
Well no, not really.
Currency prices can be incredibly difficult to forecast because there are so many factors that can contribute to a change in exchange rates. And you must remember that in currency trading you always trade in pairs. You buy one currency and sell another. So you can't just look at one nation's economy; you must look at two.
Of course, you do not have to limit yourself to only one pair of currencies. There are dozens of different currencies to choose from. But if you are just starting out, I suggest sticking to the seven major currencies:
USD - US Dollar
EUR - the Euro
GBP - British Pound
JPY - Japanese Yen
CHF - Swiss Franc
AUD - Australian Dollar
CAD - Canadian Dollar
Most small investors concentrate their trading on just these seven currencies.
Forex News Updates:
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Great Britain Pound Drops in Forex Trading Forex Hound, NY - Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading ... |
Profiting from Fear in Forex: Dollar Hits 16-Month High vs. Euro Seeking Alpha, NY - The feeling of fear and dread once again is helping the US dollar in forex trading; traders are flocking to the greenback as the default safe haven currency ... |
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Linedata and FXall team on forex trading Finextra, UK - Linedata Services (Bloomberg: LIN.FP), today announced a strategic partnership with FX Alliance ("FXall") to provide integrated access to the leading online ... |
EURO USD Forex Trading Tips and Analysis for Day Traders TopNews, India - Rate has inside range day but rallies on news of potential rate cut; OK to look at the buy side on weakness to the bottom of the range. ... |
Worst trading day since 1987 The Australian, Australia - Global Forex Trading head of derivatives Martin Slaney said he also expected London's FTSE 100 to fall 7 per cent, or more than 300 points. ... |
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