I received great feedback from my first post on this blog, Top 3 reasons why I trade forex from home. Some of the comments made me realize that some people had never even heard of forex trading, and others had heard the term, but weren’t quite sure what it was about. So I thought that I should post a basic overview of forex trading.
Forex is an abbreviated form of Foreign exchange, and can also be abbreviated as FX. It just happens to be the largest financial market on the planet, with a daily turnover of $3.98 trillion. The forex market is the place where currencies are bought and sold, in real-time, 24 hours a day.
The basic idea of forex trading is that, if you think a currency will go up relative to another currency, you buy. If you think it is going to go down, you sell. If you are right, you make money. If you are wrong, you lose money. The main idea, then, is to be right more times than you are wrong. And there are ways to cut your losses and let your winners ride, so one right call can wipe out twenty wrong calls.
One of the most famous currency trades ever was made in the 1990’s by billionaire George Soros. He had an opinion that the British Pound was going to drop in value relative to the German Mark, so he bet against it – He sold the Pound. What happened next is the stuff of history — the Pound declined steeply relative to the Mark, and Soros took home a cool $1 billion in profit. Not a bad system, where you can profit off of something going down.
The forex market is not limited to just banks and billionaires anymore. You and I can participate as well. There are two requirements; one must be over the age of 18, and have a funded account with an online forex broker. There are many good forex brokers out there, and I will review the best ones in future posts. Most even offer a practice account where you can trade with ‘practice money’ to get started, learn, and get the hang of things.
Everything builds to leading to buy a currency and sell another simultaneously. Currency quotes are presented as exchange rates, ie the value of a currency relative to another. The supply and relative demand for both currencies will determine the value of the exchange rate.
Your article is very informative about forex trading. Just bookmarked your blog and subscribed in a reader.
hey this is a very informative article about forex trading
Forex trading from home can be a good opportunity for some extra bucks. But you have to know what you do.
Your post is really helpful, you really did a great job explaining the basics of Forex trading. I would want to try to get into this in the future, once I feel that I have enough knowledge to operate one. So looking forward for your latest post about Forex, it really helps us understand it more.
Nice informative article.
I know a lot of people make a lot of money from trading foreign currencies, I just wonder what the best way is too get started, a practice account? And do you need a lot of money at first?
Yeah, that seems to be the way most people get started. You can open a practice account at eToro here: http://tinyurl.com/yz9ulqk
I have heard of people getting started with as little as $100 or $200. And with the practice account, you can really get your feet wet and get comfortable with everything before putting any money on the line.
Good points! Unique advantages of forex market are: 24 hour market, high liquidity, low transaction cost, leverage, profit potential from rising and falling prices!
How long has Forex trading been around? I’m just hearing about it now, but it sounds great.
The business mantra for working with right and exact trading strategy is critical for successful FOREX traders. These strategies based upon basic and technical analysis mix which elicit profits at big time scales. The key points to be remembered to FOREX big profits is an identification of big trends at right time.
i am a trader for the past 3years, your point is very excellent about forex market
Great site. A lot of useful information here. I’m sending it to some friends!
Automated forex is an interesting new market I’ve recently discovered, it’s possible to use ‘expert advisor’ systems to trade currencies for a profit.
It’s not like other markets, it’s open 24/7 and has low deposit minimums. The trick is to find a good strategy.
I like the facets of Forex trading like 24 hour market, high liquidity, low transaction cost, leverage, and profit potential from rising and falling prices!
Very good advise on the “practice account” I might look into it!
Hey ! thanks !!
I learned about that in school but you explain it way better than them …it helps a lot in understanding all about currencies and trade strategy (you can guess), advantages etc etc you axplain it all !..
I bookmarked it and told some friends about your site !!
Keep it up !
I have heared about the term forex trading but didnt have any awareness about it you have posted a very informative article and i think it can be a very good home business
Really very informative and goo d post. Thank you for your hard work, please keep posting and help us.
Trading currencies is a very enticing way to make a living. I’ve done a little and made some money and lost some, you definitely need to know what you’re doing and have nerves of steel.