The Forex Ultimate System - Get The Best Training
The Forex Ultimate System - Get The Best Training
Forex trading is done in one of the most liquid markets in the world and at any given point in time, the currency trading market is several times larger than all the equity markets in the world put together. Unfortunately, small time individual investors did not have the ability to participate in the foreign exchange trading market about a decade ago but the proliferation of the internet has now made it possible for individual investors with a low appetite for risk and investments of $500 to $1000 to participate in currency trading and reap the rewards. If you would like to try your hand at forex trading, here is a look at a few basics about the foreign exchange market.
Where is the FX market?
Unlike stock exchanges (NYSE etc), forex is traded on the interbank market which is an OTC market. Trading is conducted between the seller and the buyer and the market is self regulated with trades being conducted electronically or over the phone 24/7. There are no clearing houses and no arbitration panels. Although this ad hoc approach may seem perplexing at first glance, self regulation is what makes this $3 trillion market what it is. So let's talk about what you are trading here:
What is forex trading?
In currency trading you will be exchanging one currency for the other; so in essence, there is no selling or buying involved because currencies never really exchange hands and the market is simply speculative. Only 20% of the FX market caters to the needs of corporations that constantly need foreign currency to meet their demands such as payrolls, cost of good etc while 80% of the FX market comprises of speculators, be they large financial institutions or multi billion dollar hedge funds.
Currencies are traded in pairs; for instance USD/ JPY (US Dollars and Japanese Yen) so you are always long on one currency and short on the other. For instance, if you were to trade a standard lot of this pair (100,000 units), you will have essentially traded the USD for the JPY.
So where is the scope for making a profit in currency trading?
There is always a difference in the buying and selling price of a currency which is known as the spread; because it is possible to buy low and sell high, you can make a significant amount of profit in forex trading. Also, the currency market s extremely volatile with increments and decrements common every minute and although these are very small, usually a few cents or even lower for a single unit; the figure can quickly increase when multiplied by the standard lot size of 100,000
Most forex brokers let you trade on margin; this means that for every dollar that you invest; they are willing to put in 50 or 100 times more. For instance, if broker offers a margin of 1:500; the trader can and will invest $500 for every dollar that you invest; charging you interest on such investments. So, it is possible to make a significant profit even with a small investment, especiallywith the ultimate forex system.
What are the currencies that are generally traded?
Although there are several seasoned traders who work with exotic currencies like the Czech Krona or the Thai baht; as a new entrant to the currency trading market, you should stick to the seven most traded pairs and the most liquid currencies in the market and these are:
EUR/USD: Euro/ US dollar
USD/JPY: US dollar/ Japanese Yen
GBP/USD: Great Britain Pound/ US dollar
USD/CHF: US dollar/Swiss Franc
AUD/USD: Australian dollar/US dollar
USD/CAD: US dollars/Canadian dollar
NZD/USD: New Zealand dollar/US dollar
If you are interested in forex trading, start by learning about the currency pairs and their movements in reference to each other; the tools used to predict market movements, currency trends and the various trading platforms.
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