Forex Trading is one of the most exciting and fastest growing areas of trading on the Internet. Thousands of new individual traders are entering the market every day. And, with stock and bond prices significantly down, Forex offers an opportunity for smart traders to tap into lucrative profits in the huge market for currency trading.
What is Forex?
Forex involves buying and selling different currencies of the world, with the focus usually on the largest currencies, such as the US Dollar, the Euro, the Japanese Yen and a few others. As a trader, you are essentially betting that the value of one country’s currency will change relative to another.
Until recently, Forex trading could only be conducted by large financial institutions in large transactions. After 1998 however, Forex brokers were allowed to break large inter-bank units into smaller units and offer these units to individual traders.
How to make money in Forex trading:
As with all investing, Forex involves winners and losers, so Forex traders can end up on the losing side of trades.
However, for every looser there is a winner. As important as knowing the fundamentals of Forex trading, winning traders need an added level of sophistication and skill before they can see the profit potential available from Forex. Many companies now offer indispensible web based trading platforms and training systems for individual Forex traders.
Why is FOREX so interesting to so many individual traders?
The Forex market is truly a global market open 24 hours a day (weekends excluded). With Internet access, Forex trading can be done anytime regardless on your location. The Forex market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily.
There are several characteristics of Forex trading that make its profit potential unique:
- Equal opportunities in rising and falling market. As trades are always done in currency pairs, Forex traders can always find chance to make money, regardless on the fall or rise of one single currency.
- Leverage. Forex trading offers high leverage rates to the traders. By trading currency with margins of up to 200 to 1, you can trade with a minimum capital and huge ROI. Of course leverage also increases risks so be sure you have some experience before you use leverage.
- Trend Spotting: Many expert traders believe that there are ways to identify daily trading trends in Forex that can be used to allow individual small traders to make lucrative profits.
Best of all, Forex trading allows you to test your skills in a demo account before you go ‘live’ with real money.
Putting in the necessary time up-front to understand how trades work, developing a long-range strategy, and educating yourself on the marketplace, are all critical factors that can contribute to the success of a Forex Trader.
The free practice accounts offered by most online trading platforms allow you to trade for a period without risking any real money so that you can gain valuable experience in the real markets before you decide use real money. Many of these companies also claim to train individual investors in the techniques used by large trading banks to generate huge profits in the Forex market.
As with any investing there are always risks – but the use of a practice account guarantees you will not lose money as you learn this exciting field.