What is FOREX foreign exchange trading?
This article will describe some of the fundamental principles of FOREX foreign exchange trading. It will also explain why FORES has seen such a large increase over the past few years.
The Foreign Exchange Market (or Forex, as it's commonly known) is an international market where you can buy and sell currencies around the globe. Investors can buy and sell currencies to profit from slight changes in currency values. The Foreign Exchange Market or Forex is open from Monday at 0:00 GMT until Friday at 10:00 GMT. Forex traders do not have to adhere to the New York Stock Exchange's (NASDAQ) general trading hours.
This versatility attracts many investors to become Forex traders. Forex investors are also attracted by the liquidity of the Foreign Exchange Market, where trades can range between 1 and 1.5 trillion dollars per day. This massive amount of trades makes it very difficult for one trader or even a small group to have any impact on the market.
Foreign Exchange Trading is the simple act of buying and selling currency based upon the strength and fluctuation of the currency. If, for example, one was to invest $1,000 in the British Pound at 1.49989 and a 1% profit margin with the expectation that the exchange rate would rise. If that occurs and you close the exchange rate at 1.5050 you would earn roughly $400. Forex is giving you a 40% return on your investment.
Forex offers the possibility of huge profits in relatively short periods of time. The stock exchange is very different in that positions are generally maintained over a longer period of time. Forex traders hold positions for a much shorter period of time than day traders. Similar to the stock market marginal accounts can be obtained in the Foreign Exchange Market as well.
Forex margin accounts are a great way to engage Forex traders as they enable them to trade large amounts of currency without needing to deposit a lot. In many circumstances one can fund a marginal account with .05% the necessary funds. If you want to put it another way, $500 will allow for a position of $100,000. To trade Forex profitably and effectively, you need to have a method. Two methods are used to determine what Foreign Exchange Trades you should make. Fundamental Forex analysis and technical Forex Analysis are the two methods.
Technical Forex Analysis is the most commonly used practice and uses the assumption that the changes that occur in important source the Foreign Exchange Market happened for a reason and are accurate. The belief is that if a currency has been trading towards a high then that currency will mostly continue towards that high with the adverse being true as well. The technical Forex perspective does not attempt to predict the future of the market, but rather tries to capitalize on what has been observed in the past.
The fundamental Forex method takes into account all aspects of the country in which the currency is traded. Things such as the economy, the countries prime interest rates, war, poverty level, and other factors are taken into account. A Forex trader might take a decision based on the information if there is a sudden rise in prime interest rates.
Online Forex trading on the Foreign Exchange Market has the potential of being extremely lucrative. One can learn to trade by creating an online Forex Account and begin by using a learning account without real funds. You will be able to better understand how the Forex trading works and how different global events affect currencies.
