Forex Trading

Posted by kalpesh on August 14th, 2010

Forex Trading Internet has made the world a global village, bringing money minting opportunities with it. Of the several online money making alternatives, Forex trading remains the biggest, the most respected and most profitable alternative. So, let?s take a look at what is Forex, what are the advantages and what are the pitfalls that you should look in to before going head over heals in to it. What is Forex? Forex means Foreign exchange. Just like one would trade stocks, bonds, commodities, futures and options, currencies of different countries are traded. Some of the major currencies are American Dollar(USD), Euro(EUR), Japanese Yen (JPY), British Pound(GBP), Swiss Franc (CHF) and Australian Dollar(AUD). Currencies are always traded in pairs. For example-USD/EUR or say JPY/USD. How do you trade Forex? To trade Forex, you will need to open a brokerage account with a broker. Then, if you have knowledge on Forex trading, you can place the trades on your own, or you can make use of software that will trade Forex for you completely on automation. These are known as Forex Expert Advisors. Generally, these Forex EAs trade one or two currency pairs. You make profit when you are able to offload the currency pair at a higher price than its purchase price. Advantages of Forex trading: 1.Forex market is a world market and is open 24 hours a day, 5 days a week. So, you can trade at your own convenient time. 2.Online trading: You can trade Forex from the comforts of your home. You don?t need to make huge investments in hiring office space or hiring staff. You can in fact generate second income in addition to your job. 3.Low Capital outlay: You can start trading with as little as $100. 4. Forex is the biggest of all markets, with daily turnover volume crossing trillion dollars. 5. Due to the sheer size of the market, this market cannot be influenced or dominated by select few. Thus, even if you are a small investor, you will have a level play field. Ok, having seen the advantages of Forex trading, let us now take a look at the downside: Forex trading is quite complex. The value of the currency is depended on several complex factors such as the economy of the particular countries, the Government policies, the trade balances, and several other factors which may be difficult for a common man to comprehend. If you are a first time Forex trader, then, it is strongly suggested that you try trading with demo account. A demo account is just like a real account, but without involving actual money. When you have got hang of the Forex system, only then you should try going LIVE with real money. Take small steps at a time and try to build you capital. Remember, greed and fear are the worst virtues to have in Forex trading.

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Joined: August 13th, 2010
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