Basics and Myths about Forex Trading

September 1, 2013 by  
Filed under Automated Forex Trading

The Foreign exchange market is the largest financial market in the world with an average daily trading volume of nearly trillion, out of which retail traders’ average daily trading volume is around .49 trillion (Source: Triennial Central Bank Survey 2010). The largest stock market in the world, New York Stock Exchange (NYSE), which trades a volume of about billion each day dwarfs in comparison.

If you are new to the concept of forex trading, the content below will help you gain an understanding of the forex market, how it works and common myths that are wide spread in the forex market.

What is forex tradingForeign exchange or forex trading is exchange of one country’s currency with another one. Simply put, as a forex trader, you will be trading money. For example, you could be selling US Dollars and buying Euros, or buying US Dollars and selling Swiss Francs. In many respects, the price of a country’s currency is dependant on the relationship between the two economies and their prospective futures. Its exchange rate depends, among other things, on the country’s economy compared to other economies. Purchasing a country’s currency is like buying a share of that particular country’s economy. If the country’s economy does well, the value of your currency will increase which you can profit from.

Unlike other traditional equity and futures markets, there is no central trading location in foreign exchange. Generally, trading is done using telephones or Internet. The primary market for currencies is an ‘interbank market’ which includes a network of banks, insurance companies, large corporations and other large financial institutions.

Commonly traded currency pairsSome of the major currencies traded are the United States Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Swiss franc (CHF), Australia Dollar (AUD) and New Zealand Dollar (NZD). They are called as ‘majors’ because they are most widely traded currencies. Here is a short list to get you started: USD/JPY, USD/CHF, GBP/USD, EUR/USD

In order to have value in anything it needs to have a relation to something else. Think of a share of Microsoft in relation to the US Dollar, its symbol would be MSFT/USD, whereas you’d be buying MSFT and selling your USD. Currencies are traded in pairs as well, where you are buying one currency and selling another. For example, you would buy the euro and sell the U.S. dollar (EUR/USD).

Benefits of Forex TradingThere are many benefits of retail forex trading. Many people choose it because it may not involve commissions, or middlemen, or is a 24 hour market with high liquidity and very low barriers of entry. Along with these benefits the forex market is surrounded by many myths. Some of the common myths are:

Myth #1 – Make you rich with no riskMany people think that forex trading makes them rich in no time. But you need to understand that forex trading is just like any other speculative market, huge gains can occur but that is always accompanied with a lot of risk as well. And with any speculative market, long term success does not come easy, rather a lot of hard work and dedication is involved.Myth #2 Market is predictableIt is a very common myth that forex market is predictable. Many companies on the Internet and other media claim that they have found a scientific method, system, or indicator to predict the market. While it is true that some systems do show great returns for limited period, the market is quick to dispose of these, usually within 6 months. Conventional wisdom alone would suggest the guy selling you a system on the Internet isn’t using it himself – or why would he sell it? Myth #3 Listen to the expertsOne of the most enduring myths about the forex market is that experts can guide the traders to untold riches. Again, experts can be a wealth of information, but seldom would any expert give away the golden goose unless it is not laying eggs anymore. And remember “experts” is a loose term where someone in a position of authority is usually placed on TV to decimate information with a hidden agenda. Just remember to second guess everything and do your own homework.

To concludeAs a smart retail forex trader you need to stay away from these stereotypical myths. Don’t use shortcuts or look for easy money you’ll get burned. Remember, there are no secret formulas or scientific methods that can guarantee your success, rather hard work and asking a lot of questions. It is however advised to seek a professional help with the basics, such as understanding technical and fundamental analysis, proper money management, and most importantly – your trading psychology (emotional intelligence).

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Forex Trading – really should you invest? Forex trading, what the hype is all about

April 18, 2010 by  
Filed under Automated Forex Trading

forex trading
by Tradingrichmom

Article by Forex Frankie

Hey, it’s Forex Frankie here, and today I’m finally ready to tell you the whole truth about the only two Forex trading softwares I have decided to use for my everyday trading, after 2 months of meticulous testing.

Forex Autopilot” and “Forex Wealth Builder.”

Forex Trading – should really you invest? Forex trading, what the hype is all about

Forex trading is all about putting your money into other currencies, so you possibly can achieve the interest for the evening, for time period or the difference in trading revenue all about. Forex trading does involve other assets together with funds, but considering that you’re investing in other nations and in other businesses which can be dealing in other currencies the basis for the funds you make or lose could be based on the trading of dollars.

Constant trading is performed in the forex markets as time zones will differ plus the markets will open in 1 country though an additional is close to closing. What happens in one market may have an impact on the other nations forex markets, but it isn’t continually poor or fantastic, sometimes the margins of trading are close to one another.

A forex market shall be present when two nations are involved in trading, and when cash is traded for goods, services or a mixture of these things. Currency is the money that trades hands, from one to one more. Regularly instances, a bank is going to be the supply of forex trading, as millions of dollars are traded everyday. There is nearly two trillion dollars traded daily on the forex marketplace. Must you get involved in forex trading? If you’re already involved within the stock market, you have got some idea of what forex trading genuinely is all about.

The stock marketplace involves purchasing shares of a firm, and also you watch how that business does, waiting for a larger return. Within the forex markets, you are buying items or items, or goods, and you are paying income for them. As you do this, you are gaining or losing as the currency exchange differs each day from nation to country. To superior prepare you for the forex markets you are able to learn about trading and purchasing online utilizing cost-free ‘game’ like software.

You will log on and generate an account. Entering details about what you’re considering and what you need to do. The ‘game’ will permit you to create purchases and trades, involving unique currencies, so you may then see first hand what an achieve or loss might be like. As you continue on with this fake account you may see first hand tips on how to make choices based on what you know, which means you might need to read about the market adjustments or you’ll need to take a brokers material at value and play from there.

Should you, as an individual desire to be involved in forex trading, you must get involved through broker, or a monetary institution. People are also recognized as spectators, even if you are investing income because the quantity of dollars you’re investing is minimal compared to the millions of dollars which are invested by governments and by banks at any given time. This doesn’t mean you can’t get involved. Your broker or investment advisor shall be in a position to tell you extra about how you possibly can be involved in forex trading. Inside the US, there are numerous regulations and laws in regards to who can deal with forex trading for US citizens so if you’re searching the web for a broker, be certain you read the print, plus the info about exactly where the business is located and if it’s legal for you to complete enterprise with that provider.Forex trading, what the hype is all about

Forex trading is all about generating massive income. Some investors have identified it pretty straightforward to create a substantial quantity of revenue as the forex market changes each day. Forex, will be the foreign exchange marketplace. Online and offline you are going to find references to the forex market as FX too. Forex trading takes location via a broker or a monetary institution generally exactly where you’re in a position to buy other types of stocks, bonds and investments.

If you are thinking about obtaining involved within the forex markets it is best to know you’re sending dollars to be invested with other countries. This is executed to prop up the investments of men and women involved in sure types of hedge funds, and inside the markets overseas. The forex marketplace could have your funds invested in 1 marketplace one day, along with the subsequent day your dollars is invested in yet another country. The every day modifications are determined by your broker or economic institution. When reading your statements and learning a lot more about your account, you are going to discover that every single kind of currency has 3 letters that may represent that currency.

For instance, the United States dollars is USD, the Japanese yen is JPY, as well as the British pound sterling will read as GBP. You’ll also obtain that for every single transaction on your account listing you might see information that looks like this: JPYzzz/GBPzzz. This means that you took your Japanese yen money and invested it into some thing within the British pound marketplace. You will find several transactions from 1 currency to an additional if you ever have cash which is scattered by way of out the forex markets.

Forex markets trading by investment management firms are the businesses it is possible to trust with your revenue. You need to get a provider that has been dealing with forex trading given that the early seventies, and not an individual just new on the block so you get probably the most for your challenging earned funds. It is vital which you beware of firms which are popping up online, and sometimes occasions from foreign countries which might be stating they can get you involved within the forex markets and trading. Read the fine print, and know whom you’re dealing with for the perfect probable protection.

If you are considering trading on the forex marketplace, you may come across limits for investing are diverse from company to corporation. Often times you may learn which you require a minimum of 0 or 0 although other corporations will will need 00 or ,000. The firm you’re dealing with will set limits in just how much you’ll need to open an account with their enterprise. The scams which are online will let you know, that you just only have to have a or to open an account, but you need to learn extra about that enterprise and exactly where they are doing company just before investing any money, this is for your very own protection while dealing in forex trading and markets online.

About the Author

Hey, it’s Forex Frankie here, and today I’m finally ready to tell you the whole truth about the only two Forex trading softwares I have decided to use for my everyday trading, after 2 months of meticulous testing.

Forex Autopilot” and “Forex Wealth Builder.”

More Forex Trading Articles.