"Forex" is a byword today! It is synonymous with huge revenue, according to those traders or investors who have been playing the game for years! Despite this, as a newcomer to the trading business you will feel like questioning this attitude, simply because you have probably never heard about this market before and understand nothing about it!
It would therefore be advisable to present some details regarding the Forex market for the benefit of the neophyte (like you), and the expert as well--
(1) The first and foremost question to be dealt with is, "What is Forex"?
(a) An experienced trader/investor is only going to tell you that it deals with foreign currency exchange, and that is about it! But what this kind of trading implies is that you will be trading a pair of foreign currencies. To illustrate with an example, if you have a pair consisting of Euro and U.S. Dollars, you may exchange them for a pair consisting of Japanese Yen and the British Pound. The exchange rate is predetermined.
(b) So what is it that you are doing? You are buying as well as selling (simultaneously) varied foreign currency pairs and exchanging them with different traders/investors across the globe. All the trading takes place via foreign exchanges located all over the world.
(c) There is an exchange rate set for the trades to take place. This rate is decided by how the foreign currency pair performs on different international exchanges.
(2) The next question is, "Why the insistence on Forex trading only" by all those professional analysts and experts?
(a) It is easy to open an online trading account for foreign currency trading.
(b) This market has extreme liquidity, enabling the generation of huge profits. The exchange rate is never steady. By luck, if you are in possession of a currency pair that is "hot" on the market on a certain trading day, your profit percentage is bound to shoot up! Of course, the same pair may not be at the top on other days!
(c) No market can compare to the foreign exchange market in terms of trading/business volume. The ten most active trader/investor accounts contribute to an average of 73%. This can bring in additional circulating capital into the market.
(d) These are the various terminology which are associated with Forex--exchange rate regimen, currency band, exchange rates, linked exchange rate, floating exchange rate and fixed exchange rate.
(e) People who have already experienced success can provide proof about currency trading to beginners like you. The important things to be kept in mind is exchange rates and its derivatives--gain some knowledge about them. Develop some well-planned strategies, and there is nothing to stop you from collecting large profits of any trading day!
(3) A useful tool to help with Forex trading is an online trading platform that can be installed into your personal computer at home.
(a) Whatever be the kind of trade you are indulging in, it is essential that you keep track of the latest market trends, especially during a particular trading period. This platform displays the recent trends regarding the hottest currency pairs, enabling you to go in for technical analysis. Thus, you can keep away from trades that are most probably heading for losses.
(b) The platform comes with indicators as well as charting, for the purpose of technical analysis. There are also some applications to help with risk control and management, so that you do not incur losses.
