What is Forex trading?

The term Forex is derived from the foreign exchange with the trading of the foreign currencies popularly known as Forex trading and the place where the forex trading is done is known as the Forex market.

The currency of any country commands its own price with reference to the currency of any other nation. The difference between the values of these two currencies is taken into account during the Forex trading.

The Forex market is a 24 hour, 5 days a week cash market where currencies of different nations are traded through global Forex dealers. Foreign currencies are continuously bought and sold across local and international Forex markets and the value of a particular currency may change against other international currencies from time to time. The goal of Forex trading is to earn profit from foreign currency value movements. Forex trading is always done in a pair of currencies like the EURO/USD or AUD/USD.

With Forex trading, usually it is desirable to trade only when it is expected that the currency you are buying is likely to increase in value relative to the currency you are selling. However, the Forex market is mostly speculative. Forex Trading is the largest financial trading market in the world. In Forex trading, when you buy the currency of a particular country, you are investing your money in the economy of that particular country. If the economy of that particular country is healthy, then the value of your investment will increase, and you will make a profit and if the economy of that county is in bad shape then the value of your investment may decrease and you may end up in a loss. Usually the Forex market is considered as the most volatile market in the world.

The Forex market came into existence way back in the year 1971. Till recently the requirement for the start of Forex trading required a huge investment and only individuals and companies with tens of millions of dollars could afford to trade in the Forex market. But the scenario has changed now completely and you can get started with an investment of as little as $50. Most of the trade in the Forex market includes U.S. Dollars (USD), Euros (EUR), Japanese Yen (JPY), UK Pounds (GBP), Swiss Francs (CHF), Canadian Dollars (CAD) and Australian Dollars (AUD) and these currencies are considered as the most popular currencies in the Forex trade. Since the Forex market is open 24 hours, you can trade in the Forex market any time that suits you best.

When you opt in to trade in the Forex market it is desirable that you buy a foreign currency at one price, wait until it has increased in value, and then sell your holding of foreign currency. But it may require a considerable amount of time and it tests the patience you have but it will mean than you have a better chance to actually register the significant profit from the trading. There is considerable risk involved in the Forex trading, supposing the foreign currency that you expect to increase in value, falls in value instead and then you make a loss on the trade straight way. This is the condition portrayed for the long term investments but in the real terms in a Forex market nobody is going to hold on to their foreign currency for months or years. Most of the Forex trade transactions are completed within seven days at the most and Forex trading involves very small short-term changes in currency values. These short-term changes take place within a few hours in any day. This gives you the scope of not loosing a big amount of your investment from any particular deal but it also does not guarantee you a significant gain from the deal.

The Foreign Exchange Market

The Foreign exchange market deals with the trading of different foreign currencies. One currency is traded for another in the foreign exchange market only. Presently the foreign exchange market is by far the largest financial market in the world. The trade in a foreign exchange market includes trading of different currencies between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Individuals constitute a very small fraction of this foreign exchange market and they participate only through brokers or banks and most of the times they are subject to forex scams. The foreign exchange market is unique because of many factors such as its trading volumes, its geographical dispersion and the extreme liquidity of the market. Beside that the large number and variety of traders in the market and its long trading hours that is round the clock operation throughout the week except on weekends make it unique. The average daily turnover in traditional foreign exchange markets is estimated to be over $3 trillion. This is more than ten times the size of the combined daily turnover on all the world's equity markets. Foreign exchange trade has more than doubled since 2001; this is largely due to the growing importance of foreign exchange as an asset. The internet trading platform has also made it easier for retail traders to trade in the foreign exchange market. Essentially the foreign exchange market is an over the counter market where the dealers negotiate directly with each another. The biggest foreign exchange trading centre is the UK. Majority of the foreign exchange trade is handled by the institutions like Deutsche Bank, UBS AG, Citigroup incorporated, Royal Bank of Scotland, Barclays Capital, Bank of America, HSBC, Goldman Sachs, JP Morgan, Morgan Stanley. These large international banks frequently provide the market with buy and sell prices of the different currencies. Minimum trading size for most of the deals is usually kept at 100,000 units of that particular currency; this is a known popularly as a standard lot. Unlike a stock market, the foreign exchange market is divided into levels of access. This is due to volume of transactions. Central banks of various countries also participate in the foreign exchange market to align currencies to their economic needs. The bank may trade on behalf of customers, but much of the trading is done by the banks for their own account. A major fraction of this market comes from the financial activities of various companies seeking foreign exchange to pay for goods or services, their trades often have small/ big short term impact on market rates. There are two types of retail brokers who participate in the foreign exchange market such as the brokers offering speculative trading and brokers offering physical delivery of the bought currency. The foreign exchange rate fluctuations are generally caused by actual currency flows as well as by expectations of changes in currency flows caused by changes in GDP growth, inflation, interest rates, budget and trade deficits or surpluses and other economic conditions of that particular country. The foreign currencies are traded against one another; each pair of currencies thus constitutes an individual product. Although exchange rates are affected by many factors, in the end, currency prices are a result of supply and demand forces, thus its value, are not influenced by any single element, but rather by several. There are few specific terms that are used frequently in the foreign currency trade like spot. A spot transaction is a two-day delivery transaction, this trade represents a direct exchange between two currencies, it involves the shortest time frame. Next is the Forward, in this type of transaction, money does not actually change hands until some agreed upon future date. Another is the swap, in a swap; two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. Speculation also plays a major part in the foreign exchange market and it may cause some currencies to fall or gain for a short time period.

How Does Online Forex Work?

The forex market is a huge international exchange where different currencies are traded; it came into existence way back in the year 1997. Previously the forex market was restricted to the big players like the large banks, financial institutions and the central banks of different countries as the requirement for the investment were very high and most of the times it used to be in the millions of dollars. Still it is estimated to be the largest financial market in the world and the forex market is not governed by the rules of any particular country. The forex market is usually open from Sunday to Friday, on 24 hour basis. In general Forex trading is the buying and selling of different currencies. The currencies are bought and sold in pairs and this is done simultaneously. There are people who make a lot of money with forex trading after the forex trading became possible for the small investors due to the popularity of the internet which ultimately gave rise to the online forex trading. Online Forex trading is getting very popular as the days are passing by.

Mostly the currencies like Euro, Japanese Yen, U.S. dollar, Canadian dollar, British Pound, Australian dollar, and the Swiss franc rule over the forex market and most of the transactions are done in the market include them. The U.S. dollar is considered to be the strongest of them all as many commodities are internationally priced in Dollars like the gold and petroleum products and these products always require the payment in U.S. dollar only. The Forex exchange is quite different from Stock Exchanges; the forex exchange does not have a physical location. There are a lot of factors that influence the Forex rate like economic factors including the interest rates and inflation, political factors such as political unrest in other countries and major changes in government cause up and down changes in the Forex rate. However, these things tend to be short-term, and don't affect it for long. The major factor that affects the fluctuation in the rate of the forex is the surplus or the shortage of any particular currency.

Online Forex trading is usually done through various sites that are easy to find by surfing on the Internet. Most of these sites provide a wealth of information for the first time trader. Most of these sites are managed by the forex brokers or the forex dealers. They tell you about the history of Forex trading, how to invest in the trade, tips on being successful, etc. These sites allow you to open a forex trading account with as little as $300 and you are ready to start trading in the forex market. These sites are open for anyone who is interested in foreign currency trading. There is lot of information available on the net that may help you to formulate your own set of strategies for earning the profits. But, there are no guarantees that you will make money or that you won't make money. It is only you and your sheer intelligence that leads you to earn the great riches from the forex market. The online forex trading provides you the opportunity to earn as much as you can from the online Forex trading. These sites also provide you the opportunity to learn and feel the real market before investing any money by allowing you to trade in the virtual forex market. The online forex trading allows you to feel the real throbbing and pulsating international forex market once you get an account with the online forex dealer to reap the benefits of the trade.

Forex Scalping For Beginners

More new forex traders try forex scalping methods or day trading than any other methodology. This article is all about the facts you need to know so lets get started on our forex scalping for beginners review of the basics.

The first and most important point is - it doesn't work!

You will see lots of vendors on the net try and entice you with great copy and track records which look just too good to be true and they are - Why?

Because none of them have been traded in real time - all are simulated in hindsight KNOWING the closing prices. If you look at the disclaimer you will see the one below (standard CFTC) or similar - read it carefully:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

Put this disclaimer of a forex scalping system and you can say anything you like and make up any track record you like - it's as simple as that.

Forex scalping or day trading is a good story but that's all it is - it won't make you money,because the underlying logic is flawed.

Consider this:

You have millions of people trading trillions of dollars and to try and say what this vast group of people all with different investment objectives and subject to their emotions will do in a few hours is rubbish.

Traders are not logical and price volatility in a day or a few hours is totally random.

Trying to base your forex trading strategy on trying to find order in these short periods is simply doomed to failure.

Volatility is daily time periods is random -you can't get the odds on your side because support and resistance levels wont help you and you may as well base your trading and marketing timing on flipping a coin.

Don't believe me?

Try and find a forex scalping or day trading system with a real long term track record of profits and you won't find one - if you do let me know I have been looking for over 25 years.

If you want to win at forex trading and enjoy currency trading success you need to use longer time periods that will allow you to get the odds on your side with your forex trading system and that means forex swing trading or long term trend following.

This will allow you to trade the odds and enjoy forex success long term.

Today, traders are looking for easy ways to make money and of course there are none and you wouldn't expect there to be with the profits you can make - but if you work smart and get a system that can help you execute your forex trading signal in line with the odds and you can win.

So their you have it - our view of forex scalping for beginners and our view is don't try it, or you will lose all your money quickly.

Forex Trading For Beginners - A Lesson from the Turtles for Forex Success

Here we are going to outline the story of "the turtles" who were a group of people who had never traded before and went on to make over $100 million in just four years. This article is all about learning forex trading for beginners and the lessons that you can learn from the turtles, for long term forex success.

The story begins over 20 years ago in 1983, when trading legend Richard Dennis decided to prove that anyone could learn currency trading - with the right training so, he conducted an experiment.

He gathered a group of 14 people together, from all walks of life, both sexes, various ages, who had varying levels of education and then set about teaching them to trade in just 14 days.

After the 14 days training was completed, he had taught them a forex trading strategy to execute in real time and set them up with real money and real accounts - the result?

This group of traders went on to make $100 million dollars in just 4 years and many went on to become trading legends.

So what can you learn from this experiment?

The first point is - it shows the potential of trading using leverage and although you may not make as much money as the turtles with your forex trading system, it shows that anyone can learn if, they have a desire to learn and the right education.

It also shows that trading is a specifically learned skill, not some god given gift and that all people can learn. It showed that to win at forex trading you don't' need to work hard but work smart and get the right forex education, rather than knowledge for knowledge sake.

Perhaps the most important point that you can learn from the experiment is:

If you read the writings and interviews with formal turtles, they all stress that the system was easy to learn, the hard part was following it with discipline.

This is a common problem for any involved in trading.

It's hard to continually execute your trading signals with discipline, when you are in a period of drawdown and losses. This is why it is so vital to have the knowledge and confidence in what you are doing to hold your discipline.

THE REAL KEY TO SUCCESS

Is inner understanding of what you are doing, to enable you to have the confidence to execute your trading strategy with discipline.

Today, many traders simply don't want to do this - they want to follow a guru or expert and think they can give them success with no effort and of course they lose.

Dennis knew that for his disciples to trade successfully, he had to teach them how and why the method worked, so they understood what they were doing and could hold their nerve.

The fact is currency trading success looks easy to achieve but it eludes most traders, because they can't hold their nerve and trade with discipline.

While the turtle experiment took place over 20 years ago, the lessons it can teach us are as valid today as they ever were.

Forex trading for beginners looks straightforward to most newbie's - but the turtle lesson shows us, not only what you need to do but give any trader inspiration in their trading career with the success that they achieved.

This story inspired me to trade and hope it inspires you to.

Open a Mini Forex Trading Account

Learning about this subject will help you more in the long run than you may realize, until the time comes when you really need it.

Open a small online FOREX trading account first before considering of investing big if you're a beginner. FOREX trading is risky if you dont have enough experience. If your meaning is to get some experience and not interested in making big investment yet, you can begin by investing $50 - $100 first and see how it goes. To trade with such small amounts is the best way to get known with FOREX marketplace. It is greatly better than working with demo accounts, where you're not genuinely risking your money and there are no returns at all with these accounts.

You can start an online FOREX trading account and some website let you register from as little as $50. Do not laugh small accounts are a good customs to get your feet wet before invest all your money inside. Also, mini FOREX trading does not undergo the illiquidity of many futures mini-contracts, as everybody feeds from the same currency team. Not only that, you can begin trading in 5 minutes or less. You can immediately deposit the margins of the deals and trade instantly.

In the beginning of this article, we went over the basics. Now, we will look at this topic a little more in-depth.

Small accounts are a great way to start and develop your important trading expertise. Consider to wish a FOREX trading platform with high competitive spreads. This way will save your FOREX trading expenses. It can be as low as 3 to 5 pips, depending on how greatly money you want to trade.

I would want to give a few tips before you start an online FOREX trading account. Everybody is emotionally close to their money. You must have emotional detachment from your FOREX trading account. Otherwise, each taint trade will swarm you with stress, fret and fright. Just be calm when you trade and you can do greatly better.

Having this information handy will help you a great deal the next time you find yourself in need of it.

Forex Trading - 3 Simple Tips for Triple Digit Profits

If you incorporate these two tips in your forex trading strategy then you can increase your forex profits dramatically and really supercharge your gains so here they are. The first one is.

1. Reduce Your Trading Frequency 

Many traders think the more they trade the more their profit potential will be and they don't like not being in the market in case they miss a big move. They end up trading to much and taking low odds trades and lose.

You don't get rewarded for how often you trade - you get rewarded for being right with your trading signal and that's it.

I know trades who trade only a few times a year and make triple digit profits.

Their not interested in the buzz of trading, just taking trades they know will be big trends they can hold and make money with.

2. Do Not Diversify!

You will here a lot about not putting your eggs all in one basket as a way to reduce risk but there is a problem - it dilutes profit potential and most traders who start trading in forex simply don't have big enough accounts to diversify.

When you see a high odds trade on your forex trading system then you need to focus on it and not be tempted take other marginal trades for the sake of it, this leads onto the next point.

3. Load the Trade Up 

Another common wisdom is only risk 2% per trade - but for most forex traders this is too little and simply ensures they get stopped out by normal volatility.

Let's say you are trading a small account of $3,000, risking 2%, that's just $60!

You won't make much risking that.

Risk and reward go hand in hand, so the more you risk the more you can make.

This doesn't mean that you have to be rash but you need to take calculated risks at the right time and if you believe in a trade load it up.

If you have a small account then you should be risking between 10 - 20% on these trades. The high odds trades don't come around often, so you need to milk them for all there worth.

Finally....

If you don't like risk or try and restrict it to much, you will simply consign yourself to failure. You also need to have the courage to hit trades hard at the right time and be patient to wait for the high odds set ups to emerge.

If you are a trader who wants to make more money from their trading then the above 3 tips will help you do so and enjoy currency trading success.