Opening Your First Forex Trading Account

The basic premise behind the foreign exchange market is that between any two currency

pairs there will be some fluctuation in the exchange rate depending on a variety of external factors. A successful forex trader can read these signals and make buys and sells based on the factors and make money on the exchange.

Because the fluctuations in currencies are usually pennies on the dollar you need to have high volumes to make large profits. The foreign exchange market is the largest in terms of volume of any market that is traded openly. Over three trillion dollars are traded on any given day in the forex markets and is also open longer than any other market. You can trade 24 hours a day from opening on Sunday night (2200 UST) to the close on Friday (2200 UST). This is in stark contrast to the United States stock markets that open at 10 am and close at 4 pm.

There are any number of places you can find where to open a forex account, but you should look carefully and understand all of their fees before deciding on your actual account. There are a number of places that will allow you sample forex accounts that allow you to practice and demo your forex trades with fifty to one hundred thousand dollars in demo currency to practice and see if forex trading is what you really want to do. There are any number of automated forex robots you can also demo to see if they really offer the right kind of buy and sell indicators that will actually make money for you.

The majority of forex trading is in the most liquid of currencies including the US Dollar (USD), Japanese Yen, Euro, British Pound, Australian Dollar, Canadian Dollar and the Swiss Franc. Over eighty percent of all forex trading is in the major currency pairs consisting of the currencies above. Trading starts in Australia and moves its way across the time zones all week long. You make money by guessing correctly that a particular currency will strengthen versus one of its common currency pairs (USD vs. Euro) and taking a position in the currency that appreciates. Once you think it has peaked you sell it and buy in another currency that you think is strengthening and so on.

Understanding what the costs of trading are and how small your actual profits are per dollar is important so that you know how much you need to invest to reach the profits you desire. There are full fledged forex trading accounts as well as mini-FX accounts and even funds you can open to participate in the foreign exchange market place. Knowing where to open a forex account is the final step you need to take before trying your hand in foreign exchange trading.

You should also avail yourself of the opportunities to trade using a "demo account". These let you place trades just as you would in your "live" account without risking any money. You will be able to see how well - or how poorly - you do. Forex demo accounts operate identically to full-fledged live accounts except you are using fake money in your trades.

If you can earn a respectable return this way, then you are on your way towards profiting with real money. And once the "FX bug" bites you, you'll never be able to go back to the staid and boring world of traditional stocks and bonds!

by: Rudy Haynes

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