Introduction to forex trading

Here's an introduction to what Forex is, how to earn money in currency trading and how to trade into practice.

Forex trading introduction

Forex is not as scary as some beginners think. With some practical experience will be easier to understand what is going on in the currency market.

22. April 2024 by Click insider / Forex Trading

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This brief introduction will help you to understand the most basic of foreign exchange market and the most important advantages of currency trading online.

What is Foreign Exchange (FOREX)?

Currency trading is often referred to as forex trading, ForEx or simply FX.

Most Forex trading is speculative, only a small proportion represents government activities, mostly from large banks and institutions, and a growing proportion also from private investors and traders.

A very basic example

Trade is a term we are all familiar with. We shop almost every day, for example in the local grocery store. There must be a customer and a seller. You buy bananas for 10 million - the two components here are banana and 10 respectively.

Before coming into the store the store has a bunch bananas. You have 10 dollars in your wallet.

When you leave the store you've got bananas, and the store has 10 million richer. If the shopkeeper had a few days to sell bananas, maybe bananas started to become brown, and he might not have had more than 5 million for the same bunch of bananas.

Conversely, if you have euros, and I have dollars , so it immediately becomes much more exciting. Here we have two currency pairs, dollars from the United States (USD) and Euro. You with your dollars believe that the euro will be worth less in the future, and you think that my dollars will go up in value. I think the exact opposite of you, so I'm willing to make a deal with you, and we take turns, so I now have my dollars, and you have your euros.Confused? Well, don't be...

Whoever buys the currency rises most in value relative to the other currency will make money, and the other will always lose money on the deal - and that's the big difference between currency and trade that you are familiar with from the store. In store are both winners - both get something they crave more. The merchant would rather have 10 million than one cluster bananas, and you want to have your bananas rather than the 10 crowns.

In the currency market is a much more warlike environment. It's all about eating or being eaten. If you earn money, make someone else lose money. That's how the market is structured, and all participants in the market should be aware of both the opportunities and risks before they farm and because of the game. You can read much more about this on ForexProff.

The Foreign Exchange market is the largest financial market

The foreign exchange market is the largest in the world, with a turnover of more than 3 trillion dollars every day. These are not numbers would otherwise encounter every day as a numerical representation is appropriate. 3 trillion is the same as three million million million, or in other words 3 000 000 000 000 000 000 - and it is thus how much it traded and sold on the foreign exchange market, every single day. If you have not understood it before, then you probably understand now how much currency market

Difference between stock trading and currency trading

trading and currency trading have their similarities, but there are also very different. When you buy shares, you need to relate to a central exchange, such as the Oslo Stock Exchange, for example. However, when you shop currency trader so you do not stocks, but currency, and are now in an "interbank" market. It is traditionally thought of as an OTC (over the counter, over the counter / over the counter) market, although in reality rarely recover is "over the counter".

Currency trading occurs directly between two parties, preferably via the Internet or other electronic network, telephone trading is not gone completely out of fashion even if it is not a trading method I would recommend. The main centers for currency trading are Sydney, Tokyo, London, Frankfurt and of course New York. Because of this worldwide distribution is forex trading a 24-hour market.

How to trade currency?

currency traded by buying another currency. You may have seen these abbreviations GBPUSD. Here are USD for U.S. dollars, and probably accounts for users from most countries.

What currency should you buy?

The answer to this depends on the time. It is advisable to buy today may be a mistake in the morning. I will still come with one piece of advice to those who are new to currency trading. Start with a currency that is among the four main currency pairs:

most common currency pairs to trade the EURUSD, USDJPY, USDCHF and GBPUSD (EUR = Euro, USD = U.S. dollar, CHF = Swiss Franc, GBP = Great Britain Pound = British pound).

Dive in, do not be too scared

Currency trading is not scary or dangerous. On the contrary, fantastic fun and you can make money on it. I have one piece of advice to anyone who appears foreign exchange trading seems like something spenenende: Skip it, and do not be too afraid to make mistakes.

I'm obviously not want you to take all your money to try yourself as a currency trader at once. But I think you will win a lot of time and experience to just try a little at first with small amounts to find out more about the practical side of currency trading.

Do not be too concerned with theory: If you want to learn more about currency trading, there are many ways to start. You can take it gently and start reading the theory, or you can try to get some basic experience of how the market works. I am a fan of the very first experience, preferably with small amount, so you get an insight into the practical. It makes it easier to put into the theory afterwards. It is a waste of time to read a lot of theory first, if you ask me, the theory provides little sense if you have ideas about what is happening in practice.

theory is important, but the theory is much easier to understand, once you have some experience. Please read theory along the way, but do not underestimate the value of trying out forex trading with real money from the start, it may be worth gold for your future career as a currency speculator.

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