ABOUT FOREX

Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange (off-exchange). It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.

Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.

In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.

Forex trading transpires on a world wide decentralized exchange which is an over-the-counter financial market for the exchange of currencies. The purpose of Forex currency trading is to assist in international trade and investment. The FX trading market provides businesses the ability to convert one currency into another. For example, if a U.S. business is importing European products it will need to convert its dollars over to euros in order to pay the European country. The Forex trading market facilitates these types of transactions. The FX trading market boasts the biggest daily volume of any financial market in the world, this allows for very dense liquidity which is the main reason why so many retail speculators are drawn to Forex trading.

The global economy does not rest, there are always international business transactions taking place between companies located in different countries that use different currencies. The Forex trading market allows around the clock business transactions to take place. There is no waiting for the market to open as with stocks or commodities; the Forex currency trading market is always open, 24 hours a day 6 days a week. Most FX trading takes place over the internet, in this way it has allowed retail traders to easily get involved in speculating, which has worked to further the depth of liquidity in the Forex trading market.

The catalysts that drive Forex trading are largely macroeconomic mechanisms such as central bank interest rates, inflation policies, and monthly economic reports. As such, these relatively stable mechanisms allow the FX trading market to be a great fit for technical trading and especially for the utilization of simple Forex trading methods like price action analysis. There generally will be a few big news release price spikes throughout the month but the rest of the time the Forex currency trading market moves very technically, and as such, lends itself nicely to the simplicity of price action trading.

GET STARTED WITH FOREX TRADING

Before you can get started with forex trading, there are so many questions to answer. How do I choose a broker? Should I use a demo account? What do I need to know before making my first trade?
Let’s answer these questions one at a time, in order of importance.

1. Choose a broker
Making a decision on which broker to use is personal for each trader. Some brokers offer certain options that some traders will thrive on, while other traders will hate the broker for those same options. It is important to review and compare the options of each broker closely and choose the one that makes you feel most comfortable.

Before you can get started with forex trading, there are so many questions to answer. How do I choose a broker? Should I use a demo account? What do I need to know before making my first trade?
Let’s answer these questions one at a time, in order of importance.

1. Choose a broker
Making a decision on which broker to use is personal for each trader. Some brokers offer certain options that some traders will thrive on, while other traders will hate the broker for those same options. It is important to review and compare the options of each broker closely and choose the one that makes you feel most comfortable.

Opening a brokerage account is similar to opening a bank account. You'll sign a new account agreement, which you should read in full, no matter how boring. If there's something you don't understand, ask questions. This agreement determines your legal rights concerning your account.

When it comes to choosing a stock broker, customer satisfaction surveys and broker rating guides have their limits. What really matters is whether you've found the right brokerage for your needs. Who cares if all the millionaires rave about their top-drawer treatment if you can't get your broker to return calls and your account is being wiped out by excessive commissions?

Before you launch your quest for the best brokerage, ask yourself the following four questions:

* How much do I have to invest? The more you have, the more options you'll have. Unfortunately, some discount brokers that used to cater to the little guy now soak him with fees.

* What kind of investments do I want? Every brokerage will give you access to the most commonly traded stocks, but you won't necessarily have access to thinly traded issues or every mutual fund on the planet. If you want access to most hot IPOs, you may need to use a full-service broker, even if you're otherwise a do-it-yourselfer.

* How often will I trade? Many brokers link commissions and account fees to trading frequency.

* How much help do I need? Even discount brokers offer advice these days, but the more handholding you need, the more you're likely to choose a full-service broker.

2. Open a Demo Account
Once you have made your decision on which broker you like the best, it is time to open a demo account. Most brokers will offer at least a 30 day trial of their trading platform giving you a chance to trade on the platform using play money. Using a demo account is a good opportunity to make sure that you feel comfortable using the broker’s trading tools. You would not want to trade real money without being fully comfortable with the trading platform. A demo account will not only help you get a grip on how to use the broker’s trading platform, but also trading the market in real time.

Forex demo accounts allow you to practice forex trading without risking a monetary loss. This directory provides you with a list of broker companies offering the service. Once you've sharpened your skills, you can begin to make big bucks by moving on to Forex live accounts

3. Learn About Leverage
Forex trading is typically carried out using leverage, or trading on margin. Margin is a useful tool, but it can be very dangerous if it isn’t used correctly. Forex brokers typically offer anywhere from 50:1 leverage up to 400:1 leverage. The higher the number, the less money required to put on a large trade. The use of leverage is something that needs to be taken with a lot of care.

4. Practice Reading Charts
Before you start making trades you should get familiar with charts and how they work. It is a good idea to get familiar with the different time frames and the different types of charts. The shorter time frames will give you an idea of how the market is moving minute to minute. The longer time frames can show you how the market moves over longer periods and will show the larger trends. Most charting software will offer charts as lines, candlesticks, or bars. Take plenty of time to try out different looks and time frames to find the style that you are comfortable with.