FX Online Trading Chapter One

Is Forex trading a good idea?

The name Forex comes from the first letters of "For"eign "Ex"change. The Forex market is the largest market in the world. The daily turnover for the Forex market hovers around 1.9 trillion dollars per day, which is more then all other markets combined. Because of this high turnover, the Forex market is very liquid market, making it one of the most desirable markets to trade in. However, the appeal of the Forex market gives new investors the false sense that everyone who trades in the market makes money. This could not be further from the truth. Often new investors make the mistake of jumping into the market without any proper training or research. Because of this fact, typically 95% of all investors fail within the first year. This may be the case because the majority simply do not take the time to properly educate themselves.

Successful Forex traders must learn the ins and outs of Forex trading before becoming successful. This often takes years of risking their money and time.

Forex trading involves the simultaneous exchange between two currencies. Shares are bought and sold by investors in order to make profits. You make money trading in the Forex 2 ways. The first way is by buying low and selling high. For example, The Euro and Swiss value is going up, so you buy shares of the USD/Swiss, and at the same time you will sell the USD/Euro while it is up, locking in profit.

The other way of making money using the Forex trading system is by collecting on the interest each central banks pay on their currency. The United States federal reserve determines that the current interest is 5%, while the Swiss government determines that their interest rate is 1.5%. When you trade you are earning 5% on the US currency, and spending 1.5% on the Swiss currency.

The Forex market does not have a physical address. The Forex market is actually a large network of individual investors and central banks all involved in the process of changing currency. The market is open 24 hours a day, and follows all the major countries including The United States, Europe, and Asia.

The Forex market is unlike traditional markets as you are not required to place the full amount of money into each contract. The Forex market works on a margin system, typically 1%. For example, if the contract at hand is for $100,000, you are only required to place 1%, or $1,000 into the contract. This money is used more as an insurance policy in case the contract goes negative.

The main currencies found in the Forex market are:
USD: U.S. Dollar
CAD: Canadian Dollar
GBP: British Pound
EUR: Euro
CHF: Swiss Franc
AUD: Australian Dollar
HKD: Hong Kong Dollar
JPY: Japanese Yen

Forex trading takes a bit of time to master. That is why we recommend this video course on how to trade the Forex market. It is taught by one of the leading Currency trading authorities in the world. Check it out for yourself.

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