| |
Day trading forex market behaviour
By Jay Moncliff
Technology advances like the internet have spawned a new craze, where anyone with a secure internet connection prepared to undertake a small amount of training can engage in trading foreign exchange on the forex market.
Just as a day trader will closely track stock price movements on the Dow Jones Industrial Average, all over the world forex traders monitor currency fluctuations in a similar fashion.
Forex traders have the aim of using the smallest amount of one currency, say the US dollar, to purchase another currency like the British Pound. If supply of the pound lessens in a busy market, it will cost more dollars to buy pounds, and the forex trader hopes to sell their pounds at a higher than their purchase price. In many respects, this type of trading behaviour is very similar to trading in stocks, where the aim of nearly all traders is to buy low and sell high.
The trading process works under a bid/ask system. In the above example, a forex trader might bid 10 dollars in return for 5.7 British pounds, and the seller of the pounds could be asking 11 dollars for the same amount of pounds. If the seller accepts the bid, the trader then hopes the pound continues to increase in price, so that when time comes to sell, they can get in excess of the 10 dollars initially paid.
As only registered traders have access to this auction process, most online speculators will trade through a bank or broking house. Such brokerages charge a commission for facilitating the trades, and forex traders should consider these transaction costs when calculating their selling offer when time comes to exit their position, as this will influence their profit margin.
The global foreign exchange market can trade in excess of a trillion dollars a day. Sheer market size means there is considerable money to be made, and lost, through miscalculation. It is neither a guaranteed, nor easy path to riches, so traders should be educated in how to play the market. Instructional packages are available, and should be carefully reviewed as they can easily range in quality and price.
About the Author
Jay Moncliff is the founder of http://www.forexadvise.info a website specialized on Forex, resources and articles. This site provides updated information on Forex. For more info visit his site: Forex
Article Source: http://www.simplysearch4it.com/article/18314.html
| If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/18314.html" as shown above and make it hyperlinked. |
| Some other articles by Jay Moncliff | Prepackaged Shopping Cart Software: Upgrade your Site
No matter what you decide to sell online, you will most likely need shopping cart software to make your site user friendly and easy to purchase ...
An Affordable Web Hosting Primer
Not all web hosting plans are created equal. How do you find an affordable web hosting plan that will meet your needs and still be economical? There are several issues that you'll want ...
Find a Job Online
The Internet has simplified everything from shopping to banking and now even employment has been made easier because you can have a job ...
Tips for Credit Card Debt Management
Debt management is a course every American needs to take simply because so many Americans are clueless when it comes to credit and debt management. This is unfortunate because many people do permanent damage to their ...
|
|
| |
|
