Beginner Guide to Basic Forex Trading

Beginner Guide to Basic Forex Trading

Pick Up Forex Trading Now!

The name Forex comes from Foreign Exchange Market, which is also referred to as “Forex” or “FX” in short. Basically, it involves a pair of currency. Meaning you buy a currency in exchange for another country currency.

For example, if you visit Hong Kong from the US. What would you do? Go to the money changer, use your US dollar to exchange for Hong Kong dollar right? By doing so you are actually selling your US dollar and buying Hong Kong dollar so that you can spend in Hong Kong. So if you return to the US, you too will exchange your Hong Kong dollar to the US dollar. Now you are buying back the US dollar and selling your Hong Kong dollar. By now I hope you get the idea of basic currency trading.

So why trade Forex, you may ask? Well, Forex is a 24 hours market and it is one of the largest markets in the world in terms of daily volume. It trades volume range from 1 to 3 trillion USD every day. This is 6 to 8 times higher than the volume of the stock market in the world. It provides a lot of liquidity in the market. The large volume of participants also reduces opportunities for insider trading. To put things too simple, there has NEVER been a case of a complete currency collapse in a developed country.

For Forex trading is there is no restriction of short selling. Meaning you can buy (long) or sell (Short). This means you can easily trade in a rising or falling market.

Another great advantage of Forex Trading is leverage. Typically leverage increases your buying power. With this, you can increase your total return on investment with less cash outlay. Of course, increasing leverage increases risk too. However, if you know how to manage your risk, this should not be a problem. For example, if you have only 1000 dollar cash in a forex margin account, and a 200: 1 leverage, you can trade up to $200,000 in notional value.

Here is only some of the basic information on Forex Trading. To pick up forex trading, you may search for more information on the internet or buy some books on Forex to read. Understand the basic foundation of Forex is a must!

 

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