If you’ve seen the ads online or received emails promoting opportunities to be had in exchange operations, it is likely that you have checked the following questions:
What is the forex market?
Is it difficult to learn to trade forex?
How risky is the forex market?
How much money do I need to start trading in the forex market?
In the search for these answers, it is easy to get confused and get lost in the mountains of information online, banner ads, promises of quick wealth and technical terminology used by experts involved in currency trading. This article will present you with easy to understand the answers to these basic questions of foreign exchange using a common language with laymen’s terms, that can best decide for yourself, you’re right the Forex market for you?
What is Forex Market?
The Forex market is the forex market. It is commonly known as Forex, FX or forex market. It is, simply put, a forex trading market. Unlike the stock market, the Forex market operates in a decentralized manner, ie there is no trading floor, nor is there a trade in a building somewhere. In the currency market fund is not the mechanism by which two parties meet to exchange one currency for another.
Well, if that is all that is, why all the fuss? What is the problem? For the simple reason that their existence is for a simple purpose is what makes the currency market as a big deal. I know that a central bank, an international corporation, investors, speculators, government or any other entity participating in international trade, which inevitably has to convert one currency to another to conduct business and close. It is this fact that gives the foreign exchange market as a big presence. The volume of foreign exchange has to take place around the world every day in all time zones does the world’s largest market with greater liquidity, outperforming equity, fixed income, commodities, futures markets and derivatives. It operates 24 hours a day with only a short break during the weekend, which means that currency can trade as easily at 11AM on Monday as it may at 3AM on a Thursday. Is it difficult to learn to trade Forex?
As with any other financial market, foreign exchange required to achieve a level of Cerain theoretical and practical knowledge about it before you start to trade on it. Most of its principles and terminology of trade are held in common with other trade and investment markets. If you have changed the stock or other financial instruments, the concept and processes involved with currency trading does not seem alien to you.
If instead you’re brand new to trading in general, the forex market can seem overwhelming at first, but actually offers some advantages compared with other markets in learning the basics of negotiation. As mentioned above, is a 24 hour market, allowing it to participate as your schedule allows. With daily trading volume of $ 4 billion, is very liquid. No fees or rates of compensation related to currency trading. Moreover, the underlying instrument is operating is easy to understand. It is known as a currency pair. In short, you want to buy or sell one currency against another currency basis. Currency pairs are represented by the two codes of currencies that constitute the pair of commercials. The first currency code represents the base currency and is separated by a slash (/) followed by the currency. The base currency is the purchase / sale prices are refined. For example, in the pair dollar / euro, duly represented as EUR / USD, if the quote to be given to 1.2725 for that currency pair, which means that one euro will be a price of 1.2725 U.S. dollars. UU ..
Compared with market transactions, the mechanics of the Forex market are comparable or even more easy to understand regardless of their current level of knowledge.
How risky is Forex Market?
As with any other form of negotiation, the risk is inherent in the foreign exchange market. The management of risk and have a strategy for sound money management is the key to becoming a successful forex trader. For newcomers to the currency of the increased risk what you can do is start making real money trading is still at an early stage of their learning curve. Nearly all forex traders of good reputation is to offer its customers fully functional accounts practice. These accounts of work in market conditions in real time allowing you to trade without putting real money at risk. They are an invaluable tool for anyone new to Forex. Using accounts of practice allows you to develop your own trading style and analyze their performance in different market conditions. Spend more than six months of trading in an account of practice is recommended in order to get a feel and experience to currency trading.
Another area where the risk is worse for a newcomer in the high level of leverage they can have in your forex trading account. leverage ratios of 100:1 or more are not uncommon. These are marketed as a way to control larger positions to maximize their profits. While, yes, it is technically true that a highly marginalized position will greatly increase their profits if the trade goes your way, it is also true that a highly marginalized position also increase your losses.
Look at it this way, if for $ 1000 can control a position of $ 100.000, and that the position up 1%, now would be the control of a position that is worth $ 101.000. If you close it, even though it was simply a measure of 1%, means that his original account of $ 1000 is now $ 2000. Moving at 1% is reflected as 100% increase in the amount of money in your account. Very exciting, but what if it was the opposite? A 1% decline in its position would eliminate the margin of your account and your position would be automatically liquidated its agent, leaving the account at $ 0. Even if the recovery position and went to a new height, is outside the game. The greater the amount of leverage used in forex trading, the risk becomes greater. Do not lose more than they put on, but you could lose everything you put in. Similarly, the lower the leverage, the more power it would stay, reduced risk, but also reduce the potential profit.How much money I need to trade Forex?
The answer to this question can be seen as an extension of the previous response. A currency trading account can be opened with ridiculous amounts of cash. It is not uncommon to see ads promoting how you can start forex trading with as little as $ 100 or $ 10. This is because, as mentioned above, the high level of leverage that is offered to these accounts.
There are three types of foreign currency accounts can be opened with most forex brokers, which are the standard forex account, mini and micro forex account forex account. The traditional foreign exchange batch consists of 100,000 units traded currency pair, forex mini lots are one-tenth the size of 10,000 units, and a lot of micro consist of 1,000 units. This allows the foreign currency accounts to be scalable, allowing you to enter the world of forex with as many brokers advertising, as little as $ 10; but to enter the currency in comfort and do not bear the weight of the enormous risks and changes associated with high leverage, $ 1000 must be the minimum amount to open and begin operating under a micro account, $ 10,000 for an account mini and $ 100,000 for a standard account. Remember, if you just want to get your feet wet and improve the skills of foreign exchange, practice accounts are fully functional demonstration and do not require cash.
Therefore, Forex is right for you?
As indicated at the top of this article, the intention was not to convince the new terminology strategies or tactics with respect to currency, but was to provide an overview of what currency is and what involved. If you feel that you are the type of person who enjoys the challenge of learning the technical and practical aspects of a new discipline, if you have a preexisting interest in the financial and economic news and if you have the will to implement measures for risk financial compensation, then the currency may be right for you. If, however, tends to be too impulsive, have difficulty controlling their emotions in making decisions and seek rewards fast with a disregard for the risk, then maybe the currency is not an area that must be followed. Remember, you do not have to answer this question immediately. As a matter of fact, it would be wiser to first research and discover more about currency trading before reaching their final response.
For those of you willing to learn about the currency at a deeper level and technical hubpages covering more specific areas of the Forex market will appear in the link.