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.
Foreign Exchange Market, or Forex as it is commonly called, is an international exchange market to buy and sell different currencies from around the world. An investor has the ability to buy and sell these currencies in order to create gains from small movements in the value of one currency over another. 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.
Many investors are attracted to Forex trading by its versatility. The liquidity of the Foreign Exchange Market is also very attractive for the Forex investor as trades range from 1 to 1.5 trillion dollars on a daily basis. 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 simply the purchase and sales of currency based on the strength of the currency and the fluctuation in the value of that currency. For example, if one were to invest $1,000 against the British pound at 1.49989 with a 1% margin and anticipate the exchange rate to climb. 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. In the Foreign Exchange Market, you can also get marginal accounts similar to those in the stock exchange.
Forex marginal accounts are very engaging as they allow Forex traders to take large positions without having to make a large deposit. In many circumstances one can fund a marginal account with .05% the necessary funds. In other words, $500 would allow a $100,000 position. In order to trade Forex effectively and profitably, one must have some type of method to follow. There are two methods used in determining what Foreign Exchange trades one 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 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 view does not try to make long term predictions about the market but instead simply tries to take advantage of what has already been seen in the past.
The fundamental Forex method takes into account all aspects of the country in which the currency is traded. The fundamental Forex method takes into consideration factors such as the country's prime interest rate, war, poverty, and the economy. A Forex trader might take a decision based on the information if there is a sudden rise in prime interest rates.
Forex trading online on the Foreign Exchange Market can be extremely profitable. One can learn to trade by creating an online Forex Account and begin by using more hints 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.
