Article Categories

»	Arts & Entertainment
»	Automotive
»	Business
»	Careers & Jobs
»	Education & Reference
»	Finance
»	Food & Drink
»	Health & Fitness
»	Home & Family
»	Internet & Online Businesses
»	Miscellaneous
»	Self Improvement
»	Shopping
»	Society & News
»	Sports & Recreation
»	Technology
»	Travel & Leisure
»	Writing & Speaking

Reprint Article Code

Category: Articles » Business » Trading » Article » Article Code

FOREX beginners reading: Make money in foreign currency excahnge

I bet you are well aware of the existent of FOREX trading nowadays. FOREX market exists wherever one currency is traded for another. FOREX, or Foreign Exchange Market, is generally works as an international currency exchange market. Investors and speculators are allowed to trade currencies from all around the world thru FOREX trading. Major currencies traded nowadays are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars. FOREX is a very unique type of trading where traders are buying and selling 'money' in the same time. The trades are done in ... read more

Article Title:

Article Body:

FOREX is a very unique type of trading where traders are buying and selling 'money' in the same time. The trades are done in pairs, such as Euro/JPY, USD/CHF, and CAD/USD. It is the world largest trading market where an average of $1.9 trillion trades is done on a daily basis. The turnover rates in FOREX are nearly 30 times larger than the total volume of equity trades in United States.

Despite its large volume of trades done daily, FOREX is relative new to the publics nonetheless. It is only made available to publics in year 1998 where big sized inter-bank units are sliced into smaller pieces and offered to individual traders like you and me. Before that, FOREX is a game only for banks, multi national cooperation, and big currency dealers. Only those with large business size and strong financial background were permitted to trade foreign currencies.

As a matter of fact, large international banks are still the major traders in currency exchange market. Deutsche Bank is one of the top currency traders; along with other major banks like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; these banks are said to be responsible for more than 70% trades in currency market.

If you are new to FOREX trading, I bet the FOREX quotes will confuse you. USD/JPY 119.8, EUR/JPY 127.95, EUR/USD 1.2385/1.2390, and GBP/USD 1.7360/65 – these figures are just too complicated.

While FOREX quotes might looks like Greeks to the new comers, the concept behind of it is simple. Currency quoted in pairs simply means the relative value compare to the other. Always remember, currency listed at first in a FOREX quote has a constant value of 1. If you see USD/JPY 119.8, this means 1 USD (the first currency listed has a constant value of 1) is equal to 119.8 Japanese Yens. The currency USD in our example is known as base currency; while we normally call the currency listed in the second as the counter. 
 
When you are trading FOREX with currency dealer, the FOREX quotes might look a bit different from our previous example. Often, a two-sided quote, consisting of 'bid' and 'ask' price, is listed when dealing with currency brokers. For example, EUR/USD 1.2385/1.2390: 1.2385 is known as the 'bid' price while 1.2390 is commonly known as the 'ask' or 'buy' price. The 'bid' is the price at which you can sell the base currency; while the 'ask' is the price at which you can buy the base currency. As you study the numbers, you might realize that the two-sided currency price is quoted against you. Traders are forced to buy the currency in a higher price than the selling one. This is done because FOREX trades are done without any commission chargers. Thru quoting currency 'bid & ask' price differently in this way, the currency brokers are manage to make profit without charging their client commission fees directly.

Strategies in FOREX trading: Fundamental analysis and Technical analysis
 
Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. As in FOREX trading, government policies, bank policies, natural disasters, and speculators mood are some of the fundamentals considered to predict the currency market trends. Fundamental FOREX traders will review a country economy's situation base on these fundamental elements and respond accordingly. To gain max, fundamentalists often apply precise method to convert study's results into accurate entry/exit price indicator.

Instead of reviewing on the fundamental issues, traders from technical side define market movement according to data purely generated from the market. The term 'Technical' is applied in all trading fields, from commodity stocks exchange to option trading, from FOREX to futures.

Generally, the purpose of technical analysis is to find potential price reversal or pivotal points. These points basically refer the change of market trends, which then indicates when to enter or exit from the market. It is important to know that as with any other techniques in your trading system, these technical analysis indicators could be used alone or with other indicators. Traders are always recommended to learn more different technical methods to analyze different market data because none of these techniques are 100% accurate and 100% foolproof. Taking example of the 'price' data and the 'time' data, which are widely used by FOREX trader. There are some techniques consider solely on the 'price' factor, while some solely rely on the 'time' factor. The fact is if you know both technical methods, you can take both price and time into consideration during estimating market future trends. This will of course then reduce the risks of losing money in FOREX market. Also, it would be wise if traders combine both technical and fundamental techniques when trading FOREX, as a country currency value depends a lot on fundamental variables such as war, change of national leaders, terrorism attacks, as well as natural disasters.

Without a doubt, FOREX is gaining its popularity fast against other kind of trading. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling -- FOREX can be very beneficial to a variety of people. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your 'wings'. Forex trading course, seminars, eBooks, Internet, papers, – all these are helpful to raise your confidence level before you trade with your real hard-earn dollars. Plan your investment wisely by investing first on yourself; you shall get your reward at the end of the road.

Author Bio:

Some other recently published trading articles

A beginners education in online trading by Evelyn Johnston
Forex trading is the most lucrative trading in today's trade world and it seems everyone is ready to jump into the bandwagon of Forex trading. ...

Global trade to hit $27 trillion in 2030: World Bank by Gediminas Astrauskas
Global trade in goods and services could rise more than threefold to $27 trillion in 2030 with developing countries playing a ...

FOREX beginners reading: Make money in foreign currency excahnge by Support
I bet you are well aware of the existent of FOREX trading nowadays. FOREX market exists wherever one currency is traded for another. FOREX, or Foreign ...

Option Credit Spreads - Limited Risk with Limited Profit by Brad Griffin
Option trading all comes down to probability of profit. Statistically, option sellers always have a better chance of profiting. It's true that when ...

A Guide to Forex Trading System by Berg Davidsen
There is no other market in the world that can compare itself to the foreign exchange market. With almost USD 2 trillion in daily average the Forex market is bigger than all the stock and bond markets ...

Pre-inked rubber stamps work smarter by Arun Agrawal
There are several pre-defined messages that one needs to use in official communication like 'URGENT', 'Thanks for your order' and like. Pre-inked ...

Publisher Guidelines

You may reprint this article electronically in your newsletter or on your website, free of charge.

If you reprint this article from our site, then you must keep everything intact. This includes the articles title, author name, articles body, authors bio / resource box, the links contained within the article, all copyright notices and the link pointing back to our site. All links within the article must also be made active / hyperlinks.