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.
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