An Introduction to Forex Trading

First of all, lets start at the beginning, forex trading is nothing more than direct access trading of different types of foreign currencies. In the past, foreign exchange trading was generally all about big banks. Not anymore. today’s technology has brought it to the masses so that we can take advantage of the many benefits of forex trading just by using the various online trading platforms that are available now.

The currencies of today’s world are living on a floating exchange rate, and they are always traded in pairs Euro/Dollar, Dollar/Yen, etc. nearly 85% of the days trades made are based on currencies. The four major currencies traded are Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc.

When you make your trades properly you may be able to make the opposite deal so that you can take this first currency back for that other and then collect all of the profits from it. A word to know the actions that are done on the FOREX market are performed by dealers at major banks or FOREX brokerage companies. These markets are open 24 hours a day and 7 days a week too which makes for a much better marketplace.

Why Get Involved in Forex Trading?

There are some special qualities about the forex market that you can’t get with other trades. There are simply too many reason why get into it, but I will tell you some of them right now. First of all it offers a 24 hour market. A trader has the chance to take advantage of all of the profitable market conditions at any time of the day that you want. This market doesn’t open and close like the rest.

The FOREX market is also the most liquid market in the world. That means that a trader can come in or get out whenever they want. The ratio is better too in that 400 is normal when compared to a leverage ratio of 2 in the equity markets. the trade prices and fees are much lower too. With stocks etc. you will pay much more money for less. It’s the opposite with the other markets.

A trade in the FOREX market means that basically you are selling or buying one currency against another. What this means is that in a bull market or a bear market for a currency is defined in terms of the outlook for value against other currencies. You will profit if another currency goes down. Its that simple.

Continue tu read part 2

Tags:  currencies ecurrencies forex forex market forex software