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The Forex or foreign exchange is also known
as FX, and can be traded upon by anyone from home who has an
internet connection and some knowledge.
The great thing
about being a beginner to forex trading is you can trade using
"monopoly" money if you want to.
Most people have the
belief that trading currency is extremely risky and a gamble.
However there are many ways to technically analyse the market and
identify the pattern of the movement to the point we can instigate
"good" trades on a consistent basis.
So, how would you like
a change of direction. For example, imagine if in two weeks from now
you were confident enough and skilled enough to place trades on a
daily basis which give you a consistent yield of $200-500 per day.
It's very possible with the correct training. There is a high risk
involved though, it's true. If you don't have as much covered as
possible with regard to the basis of your decision to trade. If your
psychology is not right, you won't stand a chance.
The
forex never sleeps. 24 hours per day from sunrise in Australia
through to sundown in New York, banks and retail investors trade.
Banks in the multimillions.
It must be said, take your time
to learn about the forex and what you should do before diving in
with a LIVE account and blasting away capital like your on drugs.
You can do it. But do it right.
Currency is traded in
pairs. That means, as you buy one currency you automatically sell
the other currency in the pair. Examples of pairs are the EUR/USD or
the Euro against the US dollar, GBP/USD or 'cable' or 'pound dollar'
because there used to be a cable relaying info under the ocean from
Europe to US. Another example is the USD/CHF or the dollar against
the swiss franc - 'dollar-swiss' or even 'swissy'.
The left
hand currency is known as the base currency and the quoted price is
always how much of the right hand currency can be exchanged for 1
unit of the base currency or vice versa.
So for example a
quote of 1.6452 on the GBP/USD means for every 1 pound you sell you
get 1.6452 US dollars. Similarly if you were to buy the pound, the
rate is 1.6452USD to the pound.
Currency is traded in lots,
multiples of lots or for the retail investor sometimes, in fractions
of lots. One lot is equal to 100,000 units of the base currency in a
pair.
In the above example, buying 1 lot on the GBP/USD
means you are buying 100,000pounds and automatically selling
164,520USD.
Profits are made on the forex market much like
in any business, but with a twist. You can aim to buy and then sell
at a higher price. For example you buy your 100,000GBP automatically
selling 164,520USD at the rate 1.6452 and the price quoted rises to
1.6587.
You then close your position on the market which
means you are doing the reverse really. You have made a profit of 35
pips or points because the price has moved up 35 pips or points [the
last 2 decimal places]. The 'big figure' is the 2 numbers after the
decimal point generally.
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