Tips For Trading in Forex
This is the type of money that gets exchanged on the daily basis in various financial markets, including stocks, commodities and futures, and it is generally known as the Foreign Exchange or Forex market. JKT303
The world’s currencies are generally traded in pairs and often have prices that are set against one another, which allow you to profit if one of the currencies you are holding goes up in value relative to the other. For example, you may be holding the British pound (GBP) and the euro (EUR) at the same time and may be selling the USD to buy EUR. The USD may lose value relative to the EUR so you can make a profit by simply selling your EUR back.
Although there are many different financial markets, most of the Forex trade goes on over-the-counter i.e. through the internet and telephone. The value of the currency is usually based on supply and demand and the economy as a whole.
Exchange rates are determined by the value of a currency compared to that of another country. Becoming involved in Forex trade is easy and you do not need a lot of money to get started. Free tutorials are available online and most Forex dealers offer Demo accounts too, with some starting at $100. You do need a fast computer and a reliable Internet connection though. There are many different types of Forex accounts.
Most individuals start with a mini-account, which is a specially designed account for those new to Forex trading. You can test strategies with this account but there is no limit to the amount of money you can put into your Forex account. If you wish to trade in bulk, then a standard account is the best choice. Each currency’s unique three letter code is used to identify its value. The symbol used for GBP is ‘ £ ‘; the USD is ‘ USD ‘; the EUR is ‘ EUR ‘; the JPY is ‘ YEN; and the CHF is ‘ CHF ‘ ‘ etc.
When you look at the foreign exchange market, you will see that the most traded currency pairs are the ‘majors’ and include the EUR/USD, GBP/USD, USD/JPY and USD/CAD. Foreign currency pricing is affected by various factors, including economic factors, political conditions, and market hype. However, foreign currency pricing is primarily based on supply and demand and the perceived strength of a given economy compared to others.
To get started trading foreign currency, you need a foreign currency trading account. Foreign currency trading accounts (or known as a forex account) are much the same as margin accounts for shares; you must deposit a certain amount of money in your account and you will receive a percentage of the yield from that account.
The main aim of forex trading is to increase the profitability of the investor. This market lacks neither commissions nor clearing fees. Prices are quoted ‘off-price’ and this means that the price you pay for a foreign currency is the price you receive for the currency.
As with all investments, you should carefully consider your financial trading position and previous experience before entering the foreign exchange market. There are many websites and resources available that can help you to achieve this. JKT303