Currency trading has been around for a very long time and it represents the largest investment market in the world with an estimated daily volume of just over $3 trillion USD. That is a financial amount that dwarfs the billions traded in the stock exchanges around the world.
In simple terms, currency traders buy and sell world currencies based on the fluctuations in their values. But before you start pulling money out of your savings account to start trading on the Forex market, you first have to learn currency trading and understand what it is in order to generate a profit.
To understand currency trading, we need to understand the Forex market and how it works. If the stock markets are refined houses of business, then the Forex markets are the wild, wild west. There are several attributes of the currency exchange that set it apart from the stock markets around the world.
As strange as it may sound, there is no governing body that looks over the currency trading world. One of the first things you realize when you learn currency trading is that you must do your homework and be responsible for your own actions if you want to find success.
While there is no government that regulates the currency exchange, many brokers join professional Forex associations to give them a sense of credibility. Before you sign up with a Forex broker, make sure that broker has taken the time to become certified by one of the unofficial organizations that help monitor Forex trading.
Forex trading happens 24-hours a day, all around the world. Brokers are constantly processing orders and traders are constantly looking for ways to monitor their own activity. The lack of regulation and the open platform are two ways in which the Forex market has created a very dynamic, and volatile, atmosphere for traders.
Most Forex brokers deal in the standard currencies such as the U.S. dollar, the Japanese yen and the British pound. But not every broker carries every currency that is on the exchanges. That means that, instead of constantly having to wade through information on hundreds of corporate stocks before making a decision, you simply have to choose a few currencies to specialize in.
Many traders dabble in exotic currencies such as those from New Zealand, but the majority of traders stay with the common currencies. The exchanges are based on the U.S. dollar, so that is why just about every trader starts their career studying the dollar.
With Forex trading, you can go online and deal with a broker who probably does not take a commission directly from you. This is very different from stock trading where there are regulations to follow and the broker takes a pre-determined commission from each trade.
Once again, the wide open nature of currency trading tends to make it a little unpredictable. But many of the more successful traders find the unpredictable nature of the markets to be exciting and a good reason to decide to do Forex trading for a living.
If you want to learn currency trading, then you need to learn the basics. Here we will give a very general overview of how currency trading works and give you some advice on how to develop trades that will make you money.
In the currency exchange markets, you use one currency to buy another. Each Forex transaction is done using Forex pairs. These pairs are made up of two currencies that will be involved in the transaction. The first number in the Forex pair is the base currency and the second number is the quote currency. A Forex pair that has the U.S. dollar as a base currency and the euro as a quote currency would look like this:
This means that you would get 1.2345 euros for every one dollar you invest. If the value of the dollar goes down or the value of the euro goes up, then you make money.
A big part of currency trading is watching world events and determining how those events will affect the value of currency. For example, if the United States announces a large trade surplus, then the U.S. dollar suddenly becomes a strong commodity on the Forex markets.
The more common factors that affect currency value are:
A good Forex trader will keep a close eye on all of these factors and use that information in their daily trading. If you want to make money in currency trading, then you have to learn to love watching the news.
The Internet is filled with websites that will allow you to try Forex trading with fake money, but real currency exchange numbers, before you start using your own money. It is always a good idea to get familiar with something new before you start investing your money in it, and the currency exchanges are no different.
You can learn currency trading before you start getting involved with it and prevent yourself from losing a lot of money. Set a budget for your Forex trading and slowly work your way into it as you learn the ropes. As long as you take Forex trading for a test drive before you commit to it, then you should be able to enjoy this very dynamic trading market.
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This means advertised prices may not be accurate and could differ from the actual market conditions. For this reason it is not appropriate to rely on any data presented by fxBrokerSearch.com for the purposes of trading.
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