Forex trading has gained in popularity as the monetary upheaval has resulted in traders looking for one more source of speculation and earnings. However, there are many investors who have never heard of Forex and have little to no understanding of what it is or how it works.
Forex Essentials
Forex is short for "foreign exchange" and it refers to automated foreign currency exchange from around the world. It is the biggest market for traders and speculators in the world and results in trades adding up to over $3 trillion daily. Trade markets are in London, Frankfurt, New York, Sydney and Tokyo. As a result of the rotating worldwide trading structure, the Forex market is a 24/7 process.
Currencies Are Identified By Codes
Currencies are noted by a three letter code. For example, the United States dollar is noted by USD, the British pound by GBP, the euro by EUR and so on and so forth.
A "cross" is a grouping of two currencies that are being compared for exchange rates. For instance, GBPUSD means one British pound to the number of United States dollars. So GBP=1.6768 means that one British pound is equal to $1.68 United States dollars. As the rate changes, the computerized display is shown in bold to show a shift in rates.
Rates are shown in five digit figures; for example, 1.6768.
Vocabulary
Ask - the preferred trade rate for a seller. Bid - the offer from a buyer. Spread - the difference between the ask and the bid. Pip - the smallest unit in which a currency rate can vary, for example, a modification of 1.6766 to 1.6769 would be a three pip adjustment (6 to 9).
Advantages of Forex Trading
There are several advantages to using Forex trading for traders and speculators. The Forex market is open 24 hours a day, 7 days a week for the reason that it is a transnational market.
Also, it offers immediate liquidity for traders. There are always currencies to buy and sell and big players make available the short term lending necessary between banks to allow the currency trades to take place. This allows for a continually changing market that is both relatively stable and liquid.
For currency speculators who closely watch currency trends, there is terrific opportunity for profit if a specific currency is rising or falling. The goal of all market speculation is to buy low and sell high. Just as in the stock market, close market watchers will notice if a currency is starting to drop and sell those currencies while they are at the top of their value. In contrast, when a currency is starting to gain in value, then purchasers will attempt to obtain that currency whilst it is still relatively low so that they can turn around and sell it when it starts to fall again. It is this constant shifting of the market that allows for profits on either end of the shift for close market analysts. - 31876
Forex Essentials
Forex is short for "foreign exchange" and it refers to automated foreign currency exchange from around the world. It is the biggest market for traders and speculators in the world and results in trades adding up to over $3 trillion daily. Trade markets are in London, Frankfurt, New York, Sydney and Tokyo. As a result of the rotating worldwide trading structure, the Forex market is a 24/7 process.
Currencies Are Identified By Codes
Currencies are noted by a three letter code. For example, the United States dollar is noted by USD, the British pound by GBP, the euro by EUR and so on and so forth.
A "cross" is a grouping of two currencies that are being compared for exchange rates. For instance, GBPUSD means one British pound to the number of United States dollars. So GBP=1.6768 means that one British pound is equal to $1.68 United States dollars. As the rate changes, the computerized display is shown in bold to show a shift in rates.
Rates are shown in five digit figures; for example, 1.6768.
Vocabulary
Ask - the preferred trade rate for a seller. Bid - the offer from a buyer. Spread - the difference between the ask and the bid. Pip - the smallest unit in which a currency rate can vary, for example, a modification of 1.6766 to 1.6769 would be a three pip adjustment (6 to 9).
Advantages of Forex Trading
There are several advantages to using Forex trading for traders and speculators. The Forex market is open 24 hours a day, 7 days a week for the reason that it is a transnational market.
Also, it offers immediate liquidity for traders. There are always currencies to buy and sell and big players make available the short term lending necessary between banks to allow the currency trades to take place. This allows for a continually changing market that is both relatively stable and liquid.
For currency speculators who closely watch currency trends, there is terrific opportunity for profit if a specific currency is rising or falling. The goal of all market speculation is to buy low and sell high. Just as in the stock market, close market watchers will notice if a currency is starting to drop and sell those currencies while they are at the top of their value. In contrast, when a currency is starting to gain in value, then purchasers will attempt to obtain that currency whilst it is still relatively low so that they can turn around and sell it when it starts to fall again. It is this constant shifting of the market that allows for profits on either end of the shift for close market analysts. - 31876
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