How to start trading the Forex market?

What is the Forex or FX market? The foreign exchange market (also known as Forex or FX market) is the largest financial market in the world with over $ 1.5 trillion changing hands every day.

This is bigger than all U. S. Treasury and capital markets combined!

Unlike other financial markets that operate in a centralized location (ie stock exchange), the foreign exchange market in the world has no central place. It is a global electronic network of banks, financial institutions and individual traders, all involved in buying and selling currencies. Another important feature of the Forex market is that it operates 24 hours a day, for opening and closing of financial centers around the world, starting each day in Sydney, then Tokyo, London and New York. At any time, anywhere, there are buyers and sellers, making the Forex market the most liquid market in the world.

Traditionally, access to foreign currency has been available only to banks and other large financial institutions. With advances in technology over the years, however, the market is now available for everyone from banks to money managers, operators of retail accounts. The time involved in this exciting global market has never been better than now. Open an account and become an active player in the biggest market on earth.

The Forex market is very different from trading currencies on the futures market, and much easier to trade stocks or commodities.

Whether you realize it or not, and play a role in the Forex market. The mere fact that you have money in your pocket, allows an investor in currency, particularly in the United States Dollar. By holding U.S. dollars, which decided not to hold the currencies of other countries. Your purchases of stocks, bonds or other investments with the money deposited into your bank account, investments that rely heavily on the integrity of the value of U.S. Dollar currency. Due to changes in the dollar value of the United States and the fluctuations of exchange rates in May to change their investments in value, affecting your overall financial situation. In this spirit, it should not be surprising that many investors took advantage of fluctuating exchange rates using the volatility of the foreign exchange market as a way to increase your capital.

Example: Suppose you had $ 1000 and bought Euros when the exchange rate was 1.50 euro per dollar. You can then Euro 1500. If the value of the euro against the U.S. dollar increased then sell (exchange) your Euros for dollars and have more money than you started with.


You can see the following:

EUR / USD 1.5000 means the last operation
One euro is worth $ 1.50 U.S. dollars.

The first currency (in this example, the euro) is called the base currency and the second (/ USD) as against currency or quote.

Forex plays a vital role in the global economy, and there will be a great need for the exchange of currencies. International trade increases as technology and communication increases. Although there is international trade, there will be a FOREX market. The forex market has to exist for a country like Germany can sell products to the United States and be able to accept euros in exchange for the U.S. Dollar.


Currency Risks

Margin of modernity is a form of investment risk and is only appropriate for individuals and institutions capable of managing the risk of losses it entails. An account with a broker lets you trade in a currency leverage (up to 400 times your account equity). The funds in an account that is to maximize the exchange may be completely lost if the position (s) to be held in mind the experience of one percent of the value of swing. Given the possibility of losing the entire investment, speculation in foreign exchange markets can not be done with risk capital funds that if lost, do not significantly affect the investors financial well-being.