Foreign Exchange trading, or the “Forex” market, is the largest financial market in the world. The Forex market is thirty times larger than all of the U.S. equity markets combined. Many people are not familiar with Forex trading, but it’s actually quite simple and easy to understand once you learn the basic principles.
Learning the basics of Foreign Exchange trading does not have to be difficult.
The purpose of this article is to introduce you to the Foreign Exchange market, equip you with the right knowledge, and provide you with the tools you will need to be a successful Forex trader.
At first, Forex can seem confusing and intimidating. But really what we are talking about is money, here and trading the many different global currencies.
The Forex market is a market place in which currencies are bought and sold. The Forex market is different from the stock exchange market because in it currencies are being traded, whereas in the stock market it is bonds or stocks that are traded.
Here are the three most common terms that you will encounter in the foreign exchange market:
1. RATE – the current price of a currency.
2. SELL PRICE – the amount in which traders could sell their currency.
3. BUY PRICE – the amount in which traders could buy a certain currency.
Another good thing about the foreign exchange market is its accessibility.
Nowadays, almost anyone in the world can trade Forex, since the market is global. Even if you don’t live in the main trading hub, cities of London, New York and Tokyo, you can trade Forex from anywhere in the world using the Internet.
Access to Forex market trading online is very simple to set up. Many broker websites offer a Forex trading platform to download when you create your account, enabling you to start trading almost immediately.
Once you start your trading career, you will soon learn the jargon for different currencies such as Cable, Greenback, Aussie, Kiwi, Loonie, Figure, Yard and Swissie. Before long, you’ll eventually learn and pick up all of the insider terms and start sounding like a real trader!
Now that you are armed with some basic knowledge, the next step is to get further information and education about how to trade in the foreign exchange market.
One excellent way of learning foreign exchange trading is to enroll in a Forex Trading Course. Most online courses are comprised of multiple detailed tutorials on various strategies that will teach you how to be a successful trader.
Another way to easily learn foreign exchange trading is to buy and read books on Forex trading.
You could purchase physical books in bookstores or from Amazon, purchase and download e-books on Forex trading from the Internet. Be sure to look first for authors that are well respected and have good user reviews.
Possibly the very best way to learn foreign exchange trading is by ‘paper trading’ using a virtual or demo account with an online Forex broker.
Many broker firms allow you to open a practice account without charge or requiring you to put money in your trading account.
Practice accounts function exactly as a real account does, with a virtual dollar balance that you can ‘trade’, and access to live Forex market prices, charts and news. A practice account will allow you to place practice trades and will assume or calculate what your profit or loss would be on each trade, if it had been a real trade.
Once you get the hang of trading using your practice account, and are achieving consistent profits, you can add funds to your account and start to learn foreign exchange trading with real money.