Introduction to Forex trading

raman13Starred Page By raman13, 20th Jul 2010 | Follow this author | RSS Feed | Short URL http://nut.bz/1-6nmqle/
Posted in Wikinut>Business>IT & Ecommerce

Forex trading, Foreign exchange or FX all terms is use to describe the trading of world’s currencies. It is the place where the currencies are trade. Currency Trading is buying one currency and selling the other and this simultaneously form the CROSS

Foreign exchange

Forex trading, Foreign exchange or FX all terms is use to describe the trading of world’s currencies. It is the place where the currencies are trade. Currency Trading is buying one currency and selling the other and this simultaneously form the CROSS .That is to transact one currency into another for instance you buy 100$ with 70GBP or buy 70GBP with 100$ and it is one of the largest market with trades amounting to more than USD 3 trillion every day.
Forex Trading provides the platform to the investors to view the forex online and allows the investors to buy or sell who speculate and then invest according their interest. That is why Forex trading is speculative.
Trading can do between the two counterparts over the telephone or on the electronic networks

Players in the Market (Bulls and Bears):

The falling or soaring in the prices is just because of the two players i.e Bulls and Bears. Bulls are optimistic. Bulls expect increases in the prices. On Contrast Bears are pessimistic. Unlike Bulls they always expect falling in the prices.
Main centers:
The main centers for trading are Sydney, Tokyo, London, Frankfurt and New York.

Trading on Margin

Trading on Margin” sometimes exploit the foreign currency that is representing the capital that you actually do not have for example 1% margin means allowing you to trade with 1,000,000 USD and actually, you have 10,000 USD that makes your profit more quickly and in larger amount but the probability of losing is the same as the probability of winning. “Trading on margin” is leverage i.e 100:1 leverage means allowing you to invest to the limit of 1,000,000 USD even though investor have 10,000 Only. As the probability of winning is same to that of losing so it is inadvisable to maximize your leverage. To calculate the amount of margin is totally depend upon the currency you trade.
Remember: More risk—more chances of making profit and at the same time more chances of losing

WHY Trade forex:

24 Hours a day:
There is opportunity to trade 24 hours a day.


Easily find the buyer or seller:
As trading can be done any time 24 hours a day it’s easy to find buyer or seller and opportunities to make profit would also increases.
Liquidity:
Forex market is as liquid as there are always buyers and sellers available to trade.
Allow trading on margin
It allows you to trade on margin that is 100:1 advantage whatever the margin rate is decides. It allows you to trade on margin that gears up your amount (the concept of advantage as discussed above) so the opportunity to make profit would also increases.
Opportunity to make profit:
There is always opportunity to make profit even when the market prices are falling. For instance if the EUR/USD falls it means that US currency is depreciating and Euro is appreciating. If investors speculate that the USD will depreciate then they will definitely convert USD into EURO by selling US dollars.
Spread:
Spread is the Difference between ask and bid price. If the ask price is greater than the bid price then the trading is done on profit.

Tags

Foreign Exchange, Foreign Exchange News, Forex, Forex Market, Forex Trade, Forex Trading, Forex Trading Scam, Forex Trading System, Forex Trading Tip, Players In The Market Bulls And Bears, Trading On Margin, Why Trade Forex

Meet the author

author avatar raman13
I am an Engineering student. I love to write and read all knowledgeable articles. Because I think every article has many new points. I find these points and learn these.

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Comments

author avatar emmy19
20th Jul 2010 (#)

Great Article.
Informative piece

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author avatar Godwill
21st Jul 2010 (#)

Very informative. thanks for the post.

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author avatar yugasini
28th Feb 2012 (#)

hi friend,

i too like forex trading,but how i do not know,your article is informative,have a nice day

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