subject: 10 Things All Those Interested In Forex Trading For The First Time Should Know [print this page] With many things in life, it is felt that they would be far easier if there was a quick, comprehensive list of things to know before beginning. The Highway Code almost got it right, but unfortunately it is far too long to read in depth (which is probably the reason why most people do not know that it is illegal to park, even temporarily, on the designated cycle path section of any road).
Looking at Forex trading is no different and many people believe that a list that they could have read, understood and learnt prior to them beginning a Forex trading course would have helped them tremendously.
This quick list of 10 things that all beginner traders should know should not act as a replacement for a Forex trading course, but more as a piece of information to ensure that you hit the ground running when you enrol.
1. The foreign exchange market is open from 8.00am on a Monday morning until 10.00pm on a Friday night in the UK
2. All currencies are bought and sold in pairs, with a three letter abbreviation always used, such as EUR/USD (Euro and US dollar) and CHF/JPY (Swiss Franc and Japanese Yen)
3. You can buy a greater amount of currency that you can actually afford by using the leverage that a broker offers. For example, if a broker offered a leverage of 100:1, you would only need to have 100 pounds in your account to be able to purchase 1,000 pounds worth of a currency
4. There are 7 currencies that are considered to be the most popular; US Dollar, Euro, Japanese Yen, Pound Sterling, Swiss Franc, Australian Dollar and the Canadian Dollar
5. Each currency pair has a long and a short currency. The long currency is the one a trader expects to make money on when it increases in price and the short is the one that they expect to make money on when it decreases in price
6. The term Forex broker refers to someone who does the actual buying and selling of the currencies for you
7. Regardless of whatever anyone tells you, the foreign exchange market is one of the most volatile markets out there and therefore is one of the most risky to trade on
8. As of May 2009, the bank that traded the most currency was Deutsche Bank, with UBS AG and Barclays Capital coming in second and third respectively (information taken from a survey by Euromoney FX in 2009)
9. There are three main types of trader; a scalper, who aims for small, regular profits throughout a single day; a day trader, who will plan to make a profit over the period of a day or two and a position trader, who looks to capitalize on the buying and selling of currency over several days, returning a respectable profit but on a much slower basis than the first two types of traders
10. The most traded currency on the market is the US dollar, which is included in over 80 percent of currency trades according to EconomyWatch.
