Forex currency trading is an increasingly popular way to start making money online. The foreign exchange market is the largest financial market in the world and involves the buying and selling of different countries' currencies. In this article you will learn the basics you need to know about forex currency trading.
1. The primary parties involved in forex currency trading are the banks and other financial institutions, while retail traders account for a very small percentage of activity.
2. Currencies on the foreign exchange are always traded in pairs, with the most popular being the EUR/USD. Other major pairs include the GBP/USD, AUD/USD, USD/JPY and USD/CHF. In these pairs, the first currency is always measured against the second.
3. Forex currency trading is unique in the amount of leverage it offers investors. This can be as high as 400:1. Leverage allows traders to control a much larger amount of money with a very small initial investment. This can result in very large gains - as well as losses.
4. Successful trading requires the development of a system with which to approach the markets. This involves learning about concepts such as technical and fundamental analysis as well as applying correct money management.
5. Forex currency trading can be a risky venture given the volatility of the currency market and tendency for new traders to use leverage incorrectly. It is important you learn everything you can and know exactly what you're doing before you invest any real money. For this reason, many forex brokers allow you to try forex trading using a demo platform so you can see whether it's for you.
1. The primary parties involved in forex currency trading are the banks and other financial institutions, while retail traders account for a very small percentage of activity.
2. Currencies on the foreign exchange are always traded in pairs, with the most popular being the EUR/USD. Other major pairs include the GBP/USD, AUD/USD, USD/JPY and USD/CHF. In these pairs, the first currency is always measured against the second.
3. Forex currency trading is unique in the amount of leverage it offers investors. This can be as high as 400:1. Leverage allows traders to control a much larger amount of money with a very small initial investment. This can result in very large gains - as well as losses.
4. Successful trading requires the development of a system with which to approach the markets. This involves learning about concepts such as technical and fundamental analysis as well as applying correct money management.
5. Forex currency trading can be a risky venture given the volatility of the currency market and tendency for new traders to use leverage incorrectly. It is important you learn everything you can and know exactly what you're doing before you invest any real money. For this reason, many forex brokers allow you to try forex trading using a demo platform so you can see whether it's for you.
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