The Foreign Exchange Market is international and worldwide and Forex trading refers to trading of currencies from different countries agains each other. With over USD 2000 billion trading per day, Forex is the biggest market in the wold. The market is open 24 hours a day, 5 days a week, to accommodate all of the time zones for all of the major players. These now include most of Europe, the United States, and Asian markets, especially Japan. Therefore time zones obviously must be taken into consideration.
Although historically only available to large financial institutions and companies, Forex is now accessible by members of public due to the prevalence of the internet and therefore, is a good opportunity for investors to grow their money. Contrary to common notion, you do not need a lot of money to start trading Forex. Some people even start with as little as USD 200.
Another completerly separate but perhaps more important concern with trading in Forex is understanding how trade works in multiple currencies.
To start trading Forex, you would first need to open an online trading account where all your currency transactions will take place.
The importance of understanding the market
When you begin trading on Forex, you have to learn how to convert currencies and note the difference in calues, as well as how currencies are exchanged between international lines. This means you have to study the market and you have to know how the different currency reacts. Simply learning to read market trends can remove a lot of natural apprehension and uncertaintly for beginning traders.
Forex trading is always done in pairs and thus a currency is always quoted relative to another currency, like USD/JPY, EUR/USD.
Pip: stand for ‘percentage in point’ which is the smallest increment of trade in Forex.
Bid / Ask: In Forex, to bid means ‘to buy’ whereas ‘to ask’ means ‘to sell’. Bidding price is always lower than the asking price.
Spread: is the difference between the ask price and the bid price.
Margin: the minimum amount of money required to place a trade with a broker. You can trade as long as your account has this minimum amount.
Leverange: the bigger the amount of effective leverage used, the greater the swings (up and down) in your account equity. The smaller the amount of leverage used, the smaller the swings in your account equity. If you are a beginner, use small leverang to minimize an eventually loose.
Demo account is a good way to start trading with. Most Forex Trading Brookers offer free demo accounts which allows you to do live traders with ‘virtual cash’. Use this as a way to make yourself comfortable with the ups and downs of the Forex maktet, familiarise yourself with your Forex Trading Platform, develop your own strategies, learn how differant indicators works and build up your selfconfidence before you trade with your hard-earned money.
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