What in the world is The Forex Market?, how do I trade it?


If you’re new to forex trading, you’re in the right place. After reading this you should be ready to…read some more. Sorry, but forex trading education takes time and commitment. That being said, forex trading has become very popular in recent years and even a way to earn extra income from home, although this is easier said than done. By the way, forex stands for Foreign Exchange or FX for short.
Well, that’s great but so what?

If you’re familiar with stock trading you know trading stocks provides liquidity to the stock markets (Dow Jones, Nasdaq, S&P 500). Forex trading is similar. Instead of providing liquidity to stock markets, forex trading provides liquidity to currency exchange markets all around the world. Every day millions of companies buy and sell goods and services in different countries and thus exchange one currency to another. If you’ve traveled abroad, chances are you exchanged your currency for another. In an other level is all this people hedging, trading and trying to profit from tiny ups and downs of the forex prices.
This need to exchange currency is the key reason the forex market is the largest, most liquid financial market in the world dwarfing other markets. It is estimated over U.S. $4 trillion dollars are traded per day. It allows corporations with multinational reach to trade currencies for things like payroll, the cost of services from foreign vendors or even massive amounts of wealth that entire countries move when they expand their reserves of capital or they sell them to access some liquidity or control their own currency prices.

If you’re familiar with exchange rates, you may decide to travel somewhere that allows your money to go farther. At the time this was written, $1 U.S. is only worth .89 Euro. While this is better than it’s been for several years, currently, your U.S. dollar won’t go as far in places that use the Euro. However, that same $1 is currently worth $2.05 in Fiji!
The good news is that prices are constantly fluctuating, if you know how, there’s money to be made in those differences!

How can I trade in different currencies?

A few decades ago, FX was simply out of reach for the average trader. It was the “big boys club” made up of large financial institutions, highly selective hedge funds and gigantic corporations. You’re in luck because the internet changed all of that. Now, with just a few mouse clicks, anyone with a computer and an internet connection can begin forex online trading, although I wouldn’t advise to anyone to start trading right away. Learn, read and train, trading can be achieved in slow monthly or weekly moves to the short rapid way of using a forex day trading system, also known as ‘scalping’.  There are trading robots that were designed to remove the emotional element of trading, which can be damaging, although most of the times they lack consistency in the long term since they can’t adapt to the constantly changing environment of trading.

With FX trading you’re essentially trading “nothing”, but agreeing to conditions agreed upon with a third party. There’s no divining rod that will point your way to trading riches, but a solid understanding in right direction, and the developing of a trading system, can make it possible to achieve success.

Keep in mind, there’s a lot to learn and no magic solutions.

Like any financial endeavor, FX trading comes equipped with its own lexicon (Pips, Spreads, Pairs, Stops, Take Profits), and its own risks. With a solid foundation and a good strategy, you can see significant gains in FX trading.
However, if you have an internet connected computer and a real desire to learn forex trading online, like I said, you’re in the right place.

If you want to dive deeply into trading and start to understand from the beginning how everything works, I recommend you to go to thttp://www.babypips.com/school it’s an online 100% FREE course that will explain you all the way, step by step how things work and how to build your own profitable strategy.

In the meantime we will be posting valuable trading tips and advice to help you move in the right direction. So you can come back anytime you want and find exciting articles about Forex.

After taking the course at babypips, if you are ready to open a Forex account, you can do it with one of our sponsors and thus help this blog become better. Just click at the banner bellow.

Happy trading!

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2 comments on “What in the world is The Forex Market?, how do I trade it?”

  1. forex scalping Reply

    A good forex broker for scalping always offer the low spread and high leverage.
    Just like every single effectively planned attacked it need to be
    properly thought out with a stoploss in case important things do not your
    way, and a Target profit in case factors do go your way when scalp trading.

    So you must choose such broker for which this ratio is favorable.

    • forexlife01 Reply

      Yes, I agree with you, the most important part is to understand that there’s no one size fits all broker, you need to find one that adapts to your own trading style and personality.

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Important Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader’s level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment / deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on forexlife.me or on other sites that have received permission to republish the content originating on forexlife.me reflect the opinions of the individual authors and do not necessarily represent the opinions of any of forexlife.me authorized authors. Forexlife.me has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forexlife.me and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forexlife.me will not accept liability for any damage, loss, including without limitation to, any profit loss, which may either arise directly or indirectly from use of such information.