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What is Forex Trading and is it for me?

What is Forex Trading and is it for me?
By: Simon Tridull

Forex trading is the largest financial market in the world exceeding $2 Trillion a day and can be an extremely lucrative, yet volatile and risky market. Trading is not only available to large investors but smaller transactions are available to allow traders to take part in trading and profit from various online Forex Trading Systems. The word is derived from a combination of two words, foreign and exchange.

Forex trading is trading actual currencies at today's exchange rate with banks and is speculative, just like investing in other assets like stocks, unit trusts, real estate and so on. It is expressed in currency pairs, where one currency is the base and one is the counter or quote currency, for example: US dollars and Euro or US dollars and UK sterling. The major currency pairs are Euro/US Dollar (EUR/USD) and US Dollar/Japanese Yen (USD/JPY), British Pound/US Dollar (GBP/USD) and US Dollar/Swiss Franc (USD/CHF). It is all about putting your money into other currencies, so you can gain the interest for the night, for time period or the difference in trading money all around.

Forex trading is conducted on "margin" which means that a cash deposit, usually much smaller than the underlying value of the currency contract, is required in order to trade.

With the power of being able to set margins, this enables all types of people from around the world to try their hand at trading in the Forex marketplace. Although I would suggest that anyone wanting to try trading should first ensure that they understand the full concepts of trading before risking any real capital since although good profits can be made, major losses can also be made very quickly.

Trading is fun and challenging, and forex is quickly becoming one of the investing world's hottest, most rewarding opportunities. Another advantage of forex trading is of course the fact that it is global and there are not restrictions placed on shorting which means that you can enjoy your profit opportunities no matter what the market condition. Forex trading is simply a world wide trading market running 24 hours from Monday to Friday.

Although it is hard work initially learning what to do with trading Forex, it can be worthwhile with the potential profits to be gained. However, it will take extensive studying and practice before you will be able to make any real money.

The best way to get used to Forex trading is to first study the market for a while to make sure you can get to understand the different signals that you will see. Once you are comfortable with all the aspects of trading on the Forex market, the next step would be to set up a test account with a broker and use that for a while to see what results you get. This way, you will know whether you are ready to risk your own capital. However, you must remember that Forex is very high risk so you should only invest what you can afford to lose. I would suggest that when you first start to trade for real, you should find a broker that allows you to trade mini lots and start off with them until you find your feet.

Forex trading is not without its risks and many of these will be learnt during the course of trading. In addition, please note that forex trading is highly speculative and you do need to understand the risks involved in trading forex with any form of buy sell signal or forex signal for the forex market internet based or other form of trading.

Article Source: http://articlejoint.com

5 comments:

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