The forex market is the world’s largest international currency trading market operating non-stop during the working week. Most forex trading is done by professionals such as bankers. Generally forex trading is done through a forex broker – but there is nothing to stop anyone trading currencies. Forex currency trading allows buyers and sellers to buy the currency they need for their business and sellers who have earned currency to exchange what they have for a more convenient currency. The world’s largest banks dominate forex and according to a survey in The Wall Street Journal Europe, the ten most active traders who are engaged in forex trading account for almost 73% of trading volume.
How the forex Market Works
As forex is all about foreign exchange, all transactions are made up from a currency pair – say, for instance, the Euro and the US Dollar. The basic tool for trading forex is the exchange rate which is expressed as a ratio between the values of the two currencies such as EUR/USD = 1.4086. This value, which is referred to as the ‘forex rate’ means that, at that particular time, one Euro would be worth 1.4086 US Dollars. This ratio is always expressed to 4 decimal places which means that you could see a forex rate of EUR/USD = 1.4086 or EUR/USD = 1.4087 but never EUR/USD = 1.40865. The rightmost digit of this ratio is referred to as a ‘pip’. So, a change from EUR/USD = 1.4086 to EUR/USD = 1.4088 would be referred to as a change of 2 pips. One pip, therefore is the smallest unit of trade
With the forex rate at EUR/USD = 1.4086, an investor purchasing 1000 Euros using dollars would pay $1,408.60. If the forex rate then changed to EUR/USD = 1.5020, the investor could sell their 1000 Euros for $1,502.00 and bank the $93.40 as profit. If this doesn’t seem to be large amount to you, you have to put the sum into context. With a rising or falling market, the forex rate does not simply change in a uniform way but oscillates and profits can be taken many times per day as a rate oscillates around a trend.
When you’re expecting the value EUR/USD to fall, you might trade the other way by selling Euros for dollars and buying then back when the forex rate has changed to your advantage.
However, a sizeable proportion of the remainder of forex trading is speculative with traders building up an investment which they wish to liquidate at some stage for profit. While a currency may increase or decrease in value relative to a wide range of currencies, all forex trading transactions are based upon currency pairs. So, although the Euro may be ‘strong’ against a basket of currencies, traders will be trading in just one currency pair and may simply concern themselves with the Euro/US Dollar ( EUR/USD) ratio. Changes in relative values of currencies may be gradual or triggered by specific events such as are unfolding at the time of writing this – the toxic debt crisis.
Because the markets for currencies are global, the volumes traded every day are vast. For the large corporate investors, the great benefits of trading on Forex are:
• Enormous liquidity – over $4 trillion per day, that’s $4,000,000,000. This means that there’s always someone ready to trade with you
• Every one of the world’s free currencies are traded – this means that you may trade the currency you want at any time
• Twenty four – hour trading during the 5-day working week
• Operations are global which mean that you can trade with any part of the world at any time
From the point of view of the smaller trader there’s lots of benefits too, such as:
• A rapidly-changing market – that’s one which is always changing and offering the chance to make money
• Very well developed mechanisms for controlling risk
• Ability to go long or short – this means that you can make money either in rising or falling markets
• Leverage trading – meaning that you can benefit from large-volume trading while having a relatively-low capital base
• Lots of options for zero-commission trading
While you may be right in being cautious about any forex trading system that’s advertised, there are some good ones around. Most of them either utilise forex charts and by means of these, identify forex trading signals which tell the trader when to buy or sell. These signals will be made up of a particular change in a forex rate or a trend and these will have been devised by a forex trader who has studied long-term trends in the market so as to identify valid signals when they occur. Many of the systems will use forex trading software which identifies such signals from data inputs which are gathered automatically from market information sources. Some utilise automated forex trading software which can trigger trades automatically when the signals tell it to do so. If these sound too good to be true to you, look around for online forex trading systems which will allow you undertake some dummy trading to test them out. by doing this you can get some forex trading training by giving them a spin before you put real money on the table.
Investment services online are everywhere. You can invest in investment stock, investment securities, investment loan property, guide investment, etc. The only true investing opportunity you should do online is forex investing. With the proper education and the right forex training you can make millions in the blink of an eye in this fast growing, high paced investment industry. People devote so much money per year to fraud investment and investment bonds, but they do not realize how great forex investing actually is.
Let me give you a little bit of a brief history on forex investing. Forex investing has been around for decades but it has been a pretty much untapped market for the single investing consumer. This market has been completely dominated by the big players such as multi-national corporations and large financial institutions. They had a huge investment return on their money for decades. 2 TRILLION dollars are traded everyday on this unregulated market. That is why this forex market is by far the largest investing market in the entire world.
Before you jump into this huge earning potential market you must understand a few things:
DO NOT JUMP HEAD FIRST INTO THIS MARKET WITHOUT THE PROPER TRAINING. Just like the title says in bold, you need to spend at least a few weeks reading forex ebooks, doing forex demos, and all the forex training you can get. The great thing about the forex market is the free resources you have available for training. No other market has even close to this many free resources. The best training you can ever have is creating a forex demo account. You need to create a forex demo account and use “fake money” to get a feel of what it would be like trading currency with real money. In about a week, with using the proper forex ebooks and forex strategy, you will be rolling in the fake money dough in no time and be able to jump right into the best investment opportunity possible; forex investing! For as little as $25.00, you can begin your forex investing career. You must be properly forex trained and well equipped and able to adjust to change.
This is a market that is constantly fluctuating and changing and by you having a great grasp on the world events around you will give you a step up from the rest in this market. This is not like the fremont investment loan or investment property, this is investing in the real deal! With the proper education and learning abilities you have with all the online resources, you will be on your way to earning millions in no time. The great thing about this market is you can trade currencies 24 hours a day, 5 days a week. It is just like Las Vegas, instead of the city it is the market that never sleeps. The best thing you could ever do is just have the proper never give up attitude and self-determination; you will be going a long way in this market. I wish you the best of luck in your future forex trades.
Making money in the foreign exchange trading market means understanding the market and doing some form of forex technical analysis in spotting trends, timing the market, and executing your trades. Not all of your forex trades, even with the right amount of forex analysis, will turn out to be profitable. The goal of forex technical analysis is to be able to manage these risks, manage the gains and losses, and consequently result in a positive bottom line.
Forex technical analysis is something that is necessary for a forex trading that is profitable not just at present but for the longer term. A forex trading business is not one that constantly gives you profitable trades but one that is able to balance gains and losses to result in profits. To be able to do forex technical analysis, it is important to understand the fundamentals of forex trading first. There are several basics that need to be studied. The determinants of market movements should first be studied for any form of forex analysis to be possibly.
One thing that is constant in the forex market is that it is never constant. The forex market is always moving. Your knowledge of market fundamentals will tell you this. What the fundamentals cannot tell you is why and how the market moves a specific way. The price of a currency is determined not only by the market fundamentals, but by investor psychology as well. Forex technical analysis shows you how these investors are looking at the market fundamentals and how they are reacting to the movements in the market. It is actually the investors who are the key price determinants in the forex market. The supply and demand relationships, as influenced by buying and selling behavior of the investors, in the various currencies determine what the prices will be in the forex market.
Depending on the type of forex trader you are, forex trading signals can form a part of your trading arsenal.
Forex Trading Signals Defined
Forex trading signals comprise forex information on buy and sell orders or entry and exit signals sent by forex brokers or forex analysts to their subscribers either for a fee or for free.
Forex brokers are the necessary link to forex market, so once you decide to become a trader, you are doomed to long process of selecting the broker that not only suits you best, but doesn’t scam its’ traders. Almost every day, a new forex broker is being born online. With the abundant variety of features and services promised, the trick is to find a broker that you can actually trust. All of them claim to be the best, and making the right decision is not an easy task. When choosing a broker, which characteristics you should look for and compare? What are ways to build a reliable relationship with a broker? How can you ensure the security much needed in forex trading?
Each forex broker offers spreads (the so-called difference between the selling and the buying prices of a selected currency pair). The basic rule is – the lower the spread is, the better. However, for brokers the situation is reversed; since they get their commissions from spread, a higher spread is definitely better for any broker.
So, where is the comfort line where broker doesn’t feel underpaid and a trader doesn’t feel cheated? Generally, an excepted spread among traders doesn’t go over 5 pips. Anything that goes beyond that is suspicious and should be avoided.
On top of that, fixed spreads is your best option. The last thing a trader wants to see is a change in pip spread when you least expect it. So, bear in mind that some forex brokers have variable spreads, meaning that during busy market hours the spread goes so wide, that the only time you could actually profit is when the market goes bullish.