Learn Forex Trading! The word “forex” is a contraction of the words “foreign exchange”; it is sometimes abbreviated further, and simply called “FX”. Forex provides opportunities for speculation, and that is likely what stimulated your curiosity.
Forex is simply the trading of currencies. In its broadest sense, forex includes all commercial and speculative buying and selling of all the world’s currencies, making it the largest market in the world. In a forex trade, one currency is purchased while another currency is simultaneously sold; in other words, one currency is exchanged for the one being bought. The term forex properly refers to all currency trading done anywhere in the world; however, in practice, and in the context of this website, the word is often used to refer specifically to the trading of currencies by speculators.
Forex trading has become quite popular in the last decade. Everybody wants to make money but is that so easy? The answer is no. One should have a profound knowledge of how the market functions, before going live with real money.
BlackBull Markets Broker – Trade Forex, Metals, CFD’s, and CryptoCurrencies! New Zealand Regulated Broker
Trading is Risky
The first thing you need to know is that Forex trading can be risky. This is because of the use of leverage. Normally the deals are executed in volumes such as thousands of US dollars which makes it impossible for small traders to participate. Learn Forex Trading
That is why forex brokers have introduced leverage in order to make the market accessible to everyone. The leverage allows you to open a position with a fraction of the cost needed. For example, 100:1 will allow you to buy 10’000 EUR/USD with just $100 available in your account. The gains are real but so are the losses, so be careful. If the price moves too fast you are taken out of the market. Learn Forex Trading
Opening an account
Today, trading in foreign currencies by speculators usually takes place through a forex broker or dealer, who provides the trading platform to transact forex trades. Such trades occur in currency pairs, such as USD/JPY (the United States Dollars/Japanese Yen). Note that two currencies are always involved in forex trade, with one being purchased while the other is being sold.
The forex trader will generally hold the purchased currency (called a position) for a period of time, intending to profit when the prices of the two currencies change favorably. The transaction is completed, or the position is closed when the opposite currency is bought and the other sold. Profit is calculated by the difference in the buying and selling price.
Different brokers offer different services, and traders need to be careful their broker is serving their best interests. Each broker provides demonstration or practice accounts, where a new trader can play with virtual money until they feel comfortable opening a real account. Analysis can be completed and orders are placed online, at the trader’s request.
Before opening a real account with your hard-earned money, test with a demo account.
It is totally risk-free and easy to access. All of the brokers listed on Gainforex offer this service so you can easily test your strategy for a month or two. After you are certain that it works, start with a small amount of money and try not to risk more than %2 of your account in a single trade. Remember to keep emotions out of this game.
Why Trade Forex?
The profit potential is why participants enter the market. But why would a speculator choose to trade forex instead of equities or futures?
Forex offers several advantages over speculative trading in futures, stocks, and other equities. Eight major currency pairs dominate most currency trading, so it is a much simpler market to follow for most traders. The vast majority of trades involve the United States Dollar, while the Euro, British Pound, and Japanese Yen are also widely traded.
Although most currency speculation occurs between a relatively small number of currencies, many brokerages offer trading in a much wider range of less commonly-traded currencies.
Some prospective traders looking to participate in speculation are attracted by the low account balances required to open a forex account with some brokerages.
