What Currency Trading Is And What You Need To Do It Successfully

What precisely do we mean by currency trading

? In which ways can a currency trader make money? In this short introduction to currency trading, we will briefly discuss the basics of the industry.

The concept behind currency trading is in fact very simple: to a large extent it's not any different from trading in commodities, stocks or even physical products such as apples. You buy something at what you believe to be a good price and then you set out to find a buyer that will buy it from you at a higher price.

Where currency trading differs from dealing in e. G., Potatoes, is the fact that currency markets are much more volatile than the market in physical products. If you go to the market early in the morning and buy a box of tomatoes, knowing that the retail price is 25% higher, you can be virtually sure you are going to make a profit of 25% on your investment. When you buy a particular currency, there is no such certainty. It can, in fact turn around sharply and you could make a big loss on your investment.

Why would anyone get involved in a market where you are not certain you're going to make any money, you may well ask. The reason is that, when you do make money, you can make a very high profit on your initial investment in a relatively short period of time. The reverse is unfortunately also true: you can lose a substantial amount of your investment in a very short time if you don't know what you're doing.

Your first step on the road to becoming a forex trader will be to sign up for a trading account with one of the numerous companies you will find online. Find one that offers a demo account free of charge. This way you can play around as much as you want and test all your market theories without risking any of your hard-earned money.

Also make sure you get access to a good quality trading platform, preferably with live prices and the ability to draw charts. If you want to become a day trader, live prices will be very important to your success.

Now that you have your trading account, you work has only started. This is where you use the demo account to get familiar with concepts such as technical and fundamental indicators, trading systems and money management. All of these are used on a daily basis by professional traders to improve their chances of making profits and not losses.

Do not get disheartened if all this sound terribly complicated and highly technical. There's a lot to learn, yes. But it will be an exciting journey of discovery that can eventually lead you to a lucrative part-time or even full-time career.

by: Andrew Wills.

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