Forex Basics: How to start Your trading

By: Yudi Hariyanto

Everybody must have known about forex (currency exchange) market and advantages that offers. To start and try, there’s some tips about basics in forex and tell what you need to join in this challenge market.

Trade forex Learning

Before 1980’s, only large players such as banks and multi national corporations were permitted in the forex market. But after that, there are revisions that allow small investors to participate using ‘margin account’. This one makes forex trading has become so popular because with margin account 100:1, with a $1000 investment you can control $100000.

However forex is not an easy thing and you need to learn to make prudent investment decisions. Learn the risks that involved in and find out as much as possible about the forex market are a good step for any beginner before start trading in Forex. Also don’t forget to set up your mentality.

FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable forex broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

To open an account in forex is very simple. You just need to fill out a form and provide the necessary ID. The form will include a margin account agreement which states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the forex broker – most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.

Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage – using borrowed money – varies with accounts. High leverage gives you more money to trade for a given investment.

HOWEVER – beginner traders are advised to get familiar with FOREX by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are provided by most FOREX brokers.

Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.

Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all FOREX brokers. Real time quotes, news feeds, technical analysescharts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites. and

Almost every forex broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast internet connection, and an up to date operating system such as Windows XP. Once your forex account is set up, you can access it from any computer – just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.

Forex Trading are commission free, means that you can make many trades in one day without worrying about gaining high brokerage fees. Brokers make their money on the 'spread' – the difference between bids and ask prices.

Forex Trading Concept

Foreign Exchange is the simultaneous buying of one currency and selling of another. The foreign exchange market (FOREX) is the largest financial market in the world, with a volume of over $1.3 trillion daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another across the major financial centers.

Traditionally, investors' only means of gaining access to the foreign exchange market was through banks that transacted large amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971.

Forex Trading Advantages

A 24-hour market - A trader may take advantage of all profitable market conditions at any time. There is no waiting for the opening bell.

High liquidity - The Forex market with an average trading volume of over $1.3 trillion per day. It is the most liquid market in the world. It means that a trader can enter or exit the market at will in almost any market condition minimal execution marries or risk and no daily limit.

Low transaction cost - The retail transaction cost (the bid/ask spread) is typically less than 0.1% (10 pips or points) under normal market conditions. At larger dealers, the spread could be smaller.

Uncorrelated to the stock market - A trader in the Forex market involves selling or buying one currency against another. Thus, there is no correlation between the foreign currency market and the stock market. Bull market or a bear market for a currency is defined in terms of the outlook for its relative value against other currencies. If the outlook is positive, we have a bull market in which a trader profits by buying the currency against other currencies. Conversely, if the outlook is pessimistic, we have a bull market for other currencies and traders take profits by selling the currency against other currencies. In either case, there is always a good market trading opportunity for a trader.

Inter-bank market - The backbone of the Forex market consists of a global network of dealers. They are mainly major commercial banks that communicate and trade with one another and with their clients through electronic networks and telephones. There are no organized exchanges to serves a central location to facilitate transactions the way the New York Stock Exchange serves the equity markets. The Forex market operates in a manner similar to the way the NASDAQ market in the United States operates, thus it is also referred to as an over the counter ( OTC ) market.

No one can corner the market - The Forex market is so vast and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Even interventions by mighty central banks are becoming increasingly ineffectual and short lived. Thus central banks are becoming less and less inclined to intervene to manipulate market prices.

Forex Basics: An introduction

By: Yudi Hariyanto

The Foreign Exchange Market or known as FOREX is a world wide market for buying and selling currencies. Forex (currency Exchange) in the simple term is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

Forex market handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day and American stock markets exchange about $100 billion a day.

There are two reasons to buy and sell currencies.

1. about 5% of daily turnover and governments that buy or sell product and services in a foreign country or must convert profit that made in foreign currencies into their domestic currencies.

2. The other 95% is trading for profit, or speculation.

The potential for profit exists because there is always movement between currencies. Even small changes can result in substantial profits because of the large amount of money involved in forex market. At the same time, it can be a relatively safe market for the individual investor. There are safeguards built in to protect both the broker and the investor and a number of software tools exist to minimize loss.

The FOREX is made up of about 5000 trading institutions such as international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency exchange. There is no centralized location of FOREX – major trading centers are located in New York, Tokyo, London, Hong Kong, Singapore, Paris, and Frankfurt, and all trading is by telephone or over the Internet. Businesses use the market to buy and sell products in other countries, but most of the activity on the FOREX is from currency traders who use it to generate profits from small movements in the market.

Even though there are many huge players in FOREX, it is accessible to the small investor - thanks to recent changes in the regulations. Previously, there was a minimum transaction size and traders were required to meet strict financial requirements. With the advent of Internet trading, regulations have been changed to allow large inter-bank units to be broken down into smaller lots. Each lot is worth about $100,000 and is accessible to the individual investor through 'leverage' – loans extended for trading. Typically, lots can be controlled with a leverage of 100:1 meaning that US$1,000 will allow you to control a $100,000 currency exchange.

Forex trading is a really A true 24-hour market. Forex begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York.

Some advantages trading in FOREX.

· Investment in forex market is very liquid because of its size (very big volume). International banks are continuously providing bid and ask offers. The high number of transactions each day means there is always a buyer or a seller for any currency.

· The market is open 24 hours a day, 5 days a week and can be accessed anywhere. Trades can be done on the Internet from your home or office.

· It is an Open Market. Currency fluctuations are usually caused by changes in national economies. News about these changes is accessible to everyone at the same time – there can be no 'insider trading' in FOREX.

Brokers do not take commissions from their trade (commission free). They earn money by setting a 'spread' – the difference between what a currency can be bought at and what it can be sold at.

Is There Any Money Left In Currency Trading?

Currency trading may be one of the most liquid forms of trading, but it is also a volatile market that requires strategy if you wish to make money. The truth is that more people make small profits in this market, while a few are highly successful. The constant change makes this form of trading exciting and with a high profit potential; however, making a fast buck in this market may not be as easy as it used to be.

What is Currency Trading?

In its basic form, currency trading, also known as "forex trading," is simply that--trading money. It involves trading one currency for another, such as U.S. dollars for the Euro. The exchange rate is known as the foreign-exchange rate, forex rate, or FX rate and is one of the largest markets in the world, trading trillions of U.S. dollars each day. Currency trading gained enormous popularity in the 1990s, and continues today. One reason this type of trading is so popular is that it can be done from a computer, twenty-four hours a day. There are fewer currencies to trade with, which makes learning the practice much easier (as opposed to learning about the many stock options available). The most commonly traded currencies are the U.S. dollar, the Japanese yen, and the British pound.

Currencies are traded in pairs. The trader buys the one that he or she believes will appreciate in value over the other. Currency fluctuates as there is demand for it. Interest rates tend to be an indication of a currency's demand. The higher a country's interest rate, the higher demand. However, countries will sometimes try to create demand for a currency by changing interest rates. The well-informed trader needs to conduct research and make educated guesses on a currency's future.

Currency Trading is Big Business

The currency trading business is big. An estimated two trillion in U.S. dollars is exchanged each day. The forex market is the largest in the world. Because it can be done from home, many people are interested in getting involved, and the payoff can be big. It is also possible to get involved with little investment. Traders simply determine how much they are able and willing to risk, and they can enter the market.

As with other forms of trading, watching the market and making calculated decisions is more likely to result in a profit than making decisions based on emotions, hunches, or preferences. Many courses are available on currency trading. Learning more about the process can help traders make better choices. Choosing a quality course is also a matter that requires a bit of research. However, currency markets fluctuate on both short and long-term timelines, and learning how to best track these changes and the events that affect the markets can help traders, especially those new to the process. The allure of making quick cash is still out there, however, as it is possible to close a contract after a few minutes, hours, days, or weeks.

Is it nearing its Peak?

The currency trading frenzy, which expanded rapidly during the 1990s, may be reaching a peak. Why? While in some ways currency trading is easy, many people who enter the market do not make money. The idea that you can make quick cash is not as easy as it sounds. Additionally, while traditional stocks are based on a company's physical assets and product, currency trading is not absolute. Further, governments control, or attempt to control currencies to reach political objectives. Unforeseen events, such as natural disasters, can also alter a currency's value, making it more difficult to make an educated guess on a currency's future. Finally, the global marketplace is changing currencies around the world (the Euro is one such example).

This does not mean that a person cannot make money in the currency market. However, as the global marketplace continues to expand and global politics affect currencies, it is much more difficult to determine a currency's value. Making money in the Foreign Exchange market is possible, but it is not easy. Even economists have a difficult time estimating the future of currencies and purchasing power, so a trader must conduct thorough research, determine trends, and try to make the best guess possible.

Five Reasons You Have To Start Forex Trading

Why should you consider foreign exchange, or forex trading? One compelling reason is that it is a huge business, trading nearly two trillion U.S. dollars on a daily basis. The potential to make money is out there for the well-informed trader. The forex market is the largest in the world. It is larger than the U.S. stock market, and has a daily trading volume larger than all the world's stock markets combined. The following list provides a few reasons why forex trading is a smart move.

It's Easy

If the idea of trading on the stock market is intimidating, you're not alone. There is no way that anyone, including professional brokers, can know enough about all the stock options. Therefore, many traders specialize or focus on particular areas of the stock market, and many individuals are left to rely on the opinions of the professionals, who may or may not be good at their craft.

Trading on the forex market, in contrast, is much simpler. The primary currencies traded are the U.S. dollar, the Japanese yen, and the British pound. There is less to keep track of, so conducting research and analysis can be much easier.

You Can Do it from Home

If you're interested in getting involved in forex trading, all you need is a computer and a bit of time. Granted, conducting some research is wise if you want to make the best choices. But once you have an idea of your strategy, you can conduct transactions online for minimal fees and without having to pay a professional to do it for you (although this is an option). There are a number of online options for trading foreign exchange, so you'll need to conduct some research to determine the best choice for you. If you know others who trade this way, ask for their preferences. Conducting a simple Google search on forex trading will yield many results, so review and choose carefully.

The Investment is Minimal

To get involved in currency trading, you do not need to invest a lot of cash upfront. Many trading options are available for a small investment, some as low as a few hundred dollars. This allows new traders in particular to get involved, learn the process, and risk very little. To trade in the forex market, you need to determine your risk limit, and not invest above that amount. Because the initial investment can be low, many people can get involved that may not be able to invest in other options, such as traditional stocks. Forex trading is a good way to enter the trading market.

You Can Make Money

While trading on the forex market takes some research, skill, and a bit of luck, it is possible to make money. The potential for huge payoffs is at times exaggerated, but there are traders making large amounts of money in this market. The key is to learn what you are doing and make smart choices. This can include determining how much you are able and willing to risk, taking risks when necessary, and learning as much as you can about the market. Trading on the forex market also offers you more leverage than in other markets. You can use smaller amounts of money to your advantage, and the trading process is simpler than in other markets.

It's Flexible

Trading on the Foreign Exchange market is a twenty-four hour process, which means that you don't need to wait for the opening and closing of the exchange to know where you stand. You can make trades at any time of the day, which gives you much more control than if you are operating in the traditional stock market. This also allows traders to respond to breaking news immediately. The advantages of real-time trading are advantageous in that traders have a much better understanding of their investments. Conversely, in the traditional stock market, after-hours activities, for example, can affect stock values, but the affects are not immediately available.

If you're interested in trading on the forex market, do your research. Many trading companies provide free information online. The more you know, the better you decisions you'll be able to make. Many of these same companies offer free trial periods as well, which you can use to get your feet wet and determine if currency trading is for you.

By: Mike Singh, check out another articles at forex made easy

Forex - Can You Make Some Quick Money?

It is a little known fact that the foreign exchange market, trading upwards of $2 trillion daily, is the largest and most liquid in the world. Until recently, small, risk oriented investors were unable to tap into this market because of the size of transactions and stiff financial requirements for entry. That has all changed. Entry requires only a minimal amount of capital, opening the Forex to almost all investors.

Can you, as a smaller investor, make some quick money trading on the Forex? The answer is yes. But, wait a just a minute, not quite so fast!

One of the perceptions among smaller speculators is that the Forex offers an easy way to make money quickly. While that can be true, there are a number of precautions that the neophyte should take before committing to any sizable trades. Forex education is absolutely vital before you jump in feet first.

Even before beginning to develop knowledge of how to trade and what trading strategies to adopt, understanding a few basics is in order,. Unlike other markets (i.e. stock exchanges, etc.) the currency exchange market does not have a central, physical location for conducting trades. Trading is carried on directly between banks, foreign currency dealers and foreign investors using computer terminals, telephones and broker desks. Thus, foreign exchange trading is over the counter.

Indeed, most currency exchange trading takes place online. This accounts for the recent burgeoning growth of the Forex. Trading may be conducted 24 hours a day from anywhere worldwide. Anyone connected to the internet from their home or office may be a trader, and there has been a rush of investors to this market in search of quick money.

Fortunately, speculators entering this market can take advantage of the many free tutorials available on the internet. Beyond anything else, if you are a beginner, it absolutely critical that you refrain from serious trading until you have gained sufficient confidence by paper trading in a demo account. Making that first trade can be an intimidating proposition if you are a first-timer. Forex brokerages have recognized this, and most have created methods where the novice trader can gain some hands-on experience without having to risk real money. With a demo account, a new investor can practice making trades for a period of time before seriously dipping into the hectic arena of currency trading.

Another cautious way of approaching the Forex market is to avail your self of a mini-account offered by many brokers. Here you can get your feet wet with a smaller initial investment than with a full blown trading account.

One of the characteristics of currency trading is that profits can be realized in a matter of minutes, even seconds, unlike what you may have seen investing in stocks. This is attributable to rapid and random variations taking place in the foreign exchange market. So, it is in this fevered environment that you can make quick money.

Although nothing in the investment world is really easy, there are a considerable number of online signal services which can make earning profits in the Forex easier than you might think. A signal service will monitor the market for you and send any new developments of significance to your computer, cell phone or pager. This way, you can keep abreast of market changes as they occur in real time, offering you greater likelihood of making sound trading decisions.

A word of caution is in order. Numerous scams are showing up where companies offer to do your trading for you. Avoid these like the plague. Craft your own Forex strategies with an expert and trade solely on your own or through a licensed broker. No one should ever do your trading but you.

Yes, you can make money quickly in the Forex market. Trading goes on 24 hours a day in this highly accessible, highly liquid market. Opportunity always lies at your fingertips. Take the cautious approach outlined here. Probe the accumulated knowledge base in much greater depth using online broker services, free tutorials and demo accounts which will provide you the foundation you need to make quick money trading on the Forex.

Robert G. Knechtel operates several websites covering financial matters, including ForexAxis.Com - Forex Trading Education and More, CreditCardSanity.Com - How to Use Credit Cards Sanely and SecuredLoan101.Com - Guide to Personal Secured Loans. Article Source: http://EzineArticles.com/?expert=Robert_Knechtel

Forex Trading And Its Tactics

Trading the Online Forex market has many advantages over other fiscal markets, among the most significant are: better liquidity, 24hrs online market, superior execution, and many others. Traders and investor see the Forex market as a fresh speculation or expanding chances because of above mentioned benefits. Does this mean that it is quite simple to earn money trading the Forex Market? Not at all…!

The précising the forex market incoming/quitting time all based on technological an analysis that is specific for very short-term life of such forex analyses. It is resolute by days, hours, and some times even by minutes, but not by weeks or months. In all the above cases, the same technological tools are used. Having successful forex trading system carries the following tactics.

Tactics for Price Breaks

There are three different trader’s actions at price breaks:

To take a place in advance, predicting the break;
To open a place when the break is actually in progress;
To wait for the predictable rollback after break

When you work with several lots, you as a trader could open one position at every of the three stages. One could open a small place before the predicted break, and then purchase some more straight away after the break, and then lastly open extra place at an unimportant price fall during correction, which follows the break. If one trades with small place, two questions would have force on one's decisions first of all.

Gaps - Price gaps that are created on bar charts could also be used to select a proper flash to open or close forex trading positions. For example, gaps created during price development frequently become support levels. That is why, at a forex up-trend, it is sensible to open extended positions when prices actually fall to the upper border of the gap or even sometimes a bit below it. A stop order could even be placed below the gap. At a down-trend, an open place needs to be opened when prices arrive at the lower border of the gap or even at bit above it. The defensive stop order is placed above the gap, in this above case.

Averaging - Averaging is a forex trading strategy used when one has made an error or simply made a trade (the first thing that comes to one's mind) and the price has moved beside, and one makes a fresh forex operation of the same kind but at a more money-making price. The most significant drawback of averaging is that one cannot know to what price the market would go beside the trader.

The averaging looks for investing a double amount of money when compared to that invested before. Trading productively is no simple task; it is a procedure and could take years to attain the preferred results. There are a few things though every forex trader needs to take in thought that could go faster the process: having a trading system, using money management, education, being conscious of psychological things, discipline to follow your forex trading system and your forex trading plan, and others.

Tamil is a Copywriter of forex trading education. She written many articles in various topics such as forex trading strategies, online forex trading.For more information : contact her at 1worldforex1@gmail.com Article Source: http://EzineArticles.com/?expert=Tamil_Selvi

Forex Trading – An overview

If domestic stock market fails to interest you any more, consider trying your trading skills in Forex. The forex or Foreign exchange is the ideal place for those traders who look for a little more adventure in their moneymaking games. The Forex trading involves the trading in all sorts of world’s leading currencies. The Forex trading refers to a simultaneous buying and selling of different currencies. The forex trading always involves the combination of two or more currency; that is you have to trade one currency in comparison to the other. The currency combination used in this international currency trade is known by the term, ‘cross’. As for example, the Euro/US Dollar, or the GB Pound/Japanese Yen and you can deal in literally limitless combinations. However, the most commonly traded currencies belong to the group of “majors” like EURUSD, USDJPY, USDCHF and GBPUSD.

Global Forex trading provides the investors and financial institutions a new financial playground in the backdrop of a volatile currency environment in this age of globalization and free market. With the base camps in the topnotch cities like New York, Sydney, Tokyo, London, and Frankfurt, the Forex market is a kind of OTC or over the counter market where trading takes place directly between the two counterparts. Unlike the national stock markets, Forex is not under the regulation of a central exchange; it is operated on the “interbank” market. You can trade in this 24-hour market over telephone, or over the global electronic networks. These are some of the reasons behind this enormous growth.

At the core level, online foreign exchange trading can be defined as the exchanging of one currency for another. It is a kind of 'spread ' trade where buying of one currency must be followed by the sale of the other. You have to buy one currency and sell another simultaneously. Online Forex trading system is described as an ergonomic process. A seasoned trader has great intuitive abilities. You can perform all the online trading functions from a single screen including placing a trade, leaving an order, position and order management, and margin analysis. The foreign exchange market traditionally belonged to such big shots as banks, brokers and big export Houses. But picture has drastically changed with the invasion of the market by the internet. Nowadays, more and more common people are participating in the trading in Forex market. Are you confident about your trading skills? Then you can also join the bandwagon of the big international investors. You will get all the necessary resources and information right in the Internet. Being informed is important as side by side of great money making potentials, the functioning of foreign exchange market is characterized by volatility, unpredictability and risk factors.

Trading in the foreign currency proves to be exciting and in most of the cases profitable. Those who become enormously successful in this field have the unique ability of locating the risk factors. With the all-invasive growth of Internet the monopoly of big investors in the forex market has ended. But before stepping in this volatile world of foreign currency trading a small time investor should always keep in mind the implications and pitfalls that this market is entailed with.

***You may use this article on your website as long as the two URLs are hyperlinked. Tania Penwell provides information on forex trading and other financial topics for Money Savvy - your guide to retirement savings, trading, taxes, and more. Article Source: http://EzineArticles.com/?expert=Tania_Penwell