Forex Tutorial: Introduction to Currency Trading

Forex Tutorial: Introduction to Currency Trading

The foreign exchange
market (forex or FX for short) is one of the most exciting, fast-paced
markets around. Until recently, forex trading in the currency market
had been the domain of large financial institutions, corporations, central banks,
hedge funds and extremely wealthy individuals. The emergence of the
internet has changed all of this, and now it is possible for average
investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.


Daily currency fluctuations are usually very small. Most currency pairs
move less than one cent per day, representing a less than 1% change in
the value of the currency. This makes foreign exchange one of the least
volatile financial markets around. Therefore, many currency speculators
rely on the availability of enormous leverage to increase the value of
potential movements. In the retail forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity,
foreign exchange brokers have been able to make high leverage an
industry standard in order to make the movements meaningful
for currency traders.

Extreme liquidity and the availability
of high leverage have helped to spur the market's rapid growth and made
it the ideal place for many traders. Positions can be opened and closed
within minutes or can be held for months. Currency prices are based on
objective considerations of supply and demand
and cannot be manipulated easily because the size of the market does
not allow even the largest players, such as central banks, to move
prices at will.

The forex market provides plenty of
opportunity for investors. However, in order to be successful, a
currency trader has to understand the basics behind currency movements.


The goal of this forex tutorial is to provide a foundation for
investors or traders who are new to the foreign currency markets. We'll
cover the basics of exchange rates, the market's history and the key
concepts you need to understand in order to be able to participate in
this market. We'll also venture into how to start trading foreign
currencies and the different types of strategies that can be employed.


Read more: http://www.investopedia.com/university/forexmarket/#ixzz1Is1WK3uP



Read more: http://www.investopedia.com/university/forexmarket/#ixzz1Is1OMqUv