If you're just starting out in forex currency trading, it can be a bit overwhelming. After all, the foreign exchange market dwarfs the stock exchange, as trillions of dollars change hands every day. Who would have every thought the billions of dollars on the stock market would seem like chump change? But once you have an understanding of the buzz words and general trading terms you will have a basic understanding of how the markets work. Though you will want to keep learning.Currency fluctuations mean you can make money in a short time in forex trading. It's possible for an investor to multiple his earnings rapidly because the rates of exchange can go up and down very very quickly. This means there is also a risk of losing your money just as quickly, as with anything that has such a great potential.
If you have ever exchanged currency for a vacation, you know that the rates are constantly changing. For example, you may change $200 into another currency planning to travel, and then find that you do not need it and change it back. The rate may have changed in the meantime, and you end up getting back a little more money than you put in.
A forex trader doesn't convert his money at the bank. He uses a broker, in the hopes of making a profit on the exchange. It didn't use to be so, but these days almost everything is handled on the internet. In a lot of ways it is similar to stock trading. It has the same trading potential with margins where a small balance held by your broker can make a difference in much bigger deals.
If you trade forex, you are not limited to the United States. Trades happen internationally, and you can trade currency regardless of where you live. This means that the market is international and open all the time, 24/7, unlike the stock exchange which is open Monday through Friday. You will have to take time zone differences into account when trading.
Three letters are used to represent each currency. For example, GBP for the Great British Pound, EUR for the Euro, USD for the dollar, CHF for the Swiss Franc, CAD for the Canadian Dollars, etc. Exchange rates look like this: CHF/USD 1.14, which means that to buy one Swiff franc you need 1.14 American dollars.
You should look for a broker or investment management company you trust if you want to get started in forex trading. Definitely look around and shop online, getting involved in forums and do your research before making a choice. Check out the companies history and performance, and always make sure to use a demo account when you begin.
Another new innovation that can be a great educational tool, and make you some money, is an automated trading robot. These bots aren't walking talking robots; they are a kind of advanced software that analyzes the market for you and can make your trades 24 hours a day depending on your settings. Usually you can do a demo to test it out and get the hang of it first. You definitely want to do that before you start trading with real money. You can learn what you can from reading and what your broker tells you, and then watch the bot to understand how to make a good trade.
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