What is Forex Trading?
Simply put, trading currencies is when you buy and sell currencies on the forex market in order to make money.
Defined as the currency exchange rate, this simply represents the rate at which one currency can be exchanged with another.
Rates are always quoted in pairs for example JPY/GBP, the Yen against the Pound and fluctuation occurs through economic, geopolitical and industrial factors – and it’s these main factors that will influence your decision on whether to buy or sell your chosen currency pair.
So for example the JPY/GBP rate will represent the rate at which the number of British Pounds one Yen can purchase. If the currency exchange rate rises, you will sell the Yen back, therefore making a profit. However bear in mind that whilst vast profit can be made trading this volatile market, as can enormous loss.
Why Trade Currency Pairs?
Forex is currently the world’s largest market platform, with approximately 3.4 trillion U.S dollars in daily circulation, 24 hours a day, 5 days a week. It is now considered a “step” above the equities market where the novice and the experienced trader will benefit from some key differences:
1. 24 hour trading – you decide and dictate when and how to trade.
2. A number of firms don’t charge commissions, which basically means you will pay only the bid/ask of spreads.
3. You can refine and focus your trading on picking from a few currencies rather than from some 3000 to 5000 stocks.
4. You can leverage a trade, but this may well magnify potential gains and losses.
5. Forex is accessible to those on a modest income as you won’t need a lot of money to get started, plus some firms offer incentives to home traders such as bonus capital upfront to get the ball rolling. Reputable firms make money when you make money so it’s in their interest for both parties to succeed.
Why Forex Currency Trading Is Not For Everyone
Having asked the question “what is forex Trading?” – before deciding to trade currencies you should carefully consider your investment objectives, your appetite for risk, your experience and your desire to learn.
Remember, you could well lose some or all of your initial investment trading forex that maybe you cannot afford to lose, so you “should” always seek advice from an independent financial adviser, which reputable firms should supply, before you make that first investment.
With online forex trading becoming a more and more popular and lucrative option to make money online as well as offline, it is hardly surprising that there is an increase of novice traders in the field. However, before you actually start investing money into currency trading, it is important to understand what is forex as well as have an insight into the market and its ways.
What is forex can simply be answered by the fact that it deals with the exchange of foreign currencies in pairs. In other words, it is defined as the buying and selling of currency, where one person buys another currency using a different currency. Commonly traded currencies are the US Dollar, British Pounds, Japanese Yen and the Euro.
It is important to understand that each currency has its own value against the other in the global market, which is called the exchange rate. In other words, currencies are traded in pairs, where the first currency is the base currency and the second is the quote currency. The base currency is always valued at 1 and is the numerator while the quote currency is the denominator and changes according to the fluctuations in the market. For example, in the currency pair GBP/JPY, British Pounds or GBP is the base currency and JPY or Japanese Yen is the quote currency. Where GBP/JPY is 150, it means that in order to get 1 British Pound you have to pay 150 Japanese Yen.
It is interesting to note that in the initial days of forex trading, only banks, institutions and groups were allowed to trade in foreign currencies, making it an exclusive trade. However, with the passage of time, more and more individual traders started entering the market, which effectively put an end to the exclusive nature of this market. Today, with the help of a PC, internet connection and little money, you can start trading in the foreign exchange market without any hassle.
It is necessary to add here that while entering the forex market is easy, sustaining your investment and making a profit requires skill, knowledge and determination, which can be easily learned from various sources. Given the popularity of online forex trading, there are several schools and workshops, both online as well as offline, which deal with the basics of forex trading, right from the basic questions of what is forex to the ways and means that you can adopt for continuous profits.
How Do I Start Making Money With Forex?
The great thing about Forex Trading is that anybody can participate and get started making money! Thanks to smart technology called “Forex Robots” you don’t need any experience or special qualifications to become a Forex Trader. All you need is a little money to invest (whatever you can afford) and access to a computer and the internet. Of course, the more knowledge and skill you acquire before trading in the Forex market it can certainly help you, but it is not essential.
What Is A Forex Robot?
If you could hire the best Stock Broker to work for you 24 hours a day, 7 days a week, and give you the best trading advice for only a few hundred dollars per year, would you be interested? My guess is YES! Well, in simple terms, a Forex robot also known as a Forex Trading Robot is similar to a virtual stock broker. A Forex robot will give you Forex trading advice 24/7, this sophisticated trading software will advice you about what foreign currency to buy or sell. It is constantly monitoring international markets even whilst you are sleeping! Forex robots are ideal for busy people who are always on the go, they are also and deal for newbie’s, people who are new to the forex market with little skill or experience.
To use a Forex Robot (forex system) first you must have a computer and internet access. You simply sign-up online with a company that offers a Forex Robot, pay a small membership fee, then you can login 24/7 to get predictions and trade online.
to find the best forex robots and learn more about forex trading. Forex business opportunities once restricted to large banks and blue chip companies has now become available to the average Joe. Thanks to the power of the internet and leverage offered by independent brokers the ability to trade forex has never been easier and is fast becoming the number 1 home based business.