How to Start Trading the Forex Market - Part I What is FOREX?

What is FOREX or FOREX MARKET?

The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.5 trillion changing hands every day.

That is larger than all US equity and Treasury markets combined!Unlike other financial markets that operate at a centralized location (i.e. stock exchange), the worldwide Forex market has no central location.

It is a global electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of national currencies. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York.

At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. With advances in technology over the years, however, the Forex market is now available to everybody, from banks to money managers to individual traders trading retail accounts.

The time to get involved in this exciting, global market has never been better than now. Open an account and become an active player in the largest market on the planet.

The Forex Market is very different than trading currencies on the futures market, and a lot easier, than trading stocks or commodities.

Whether you are aware of it or not, you already play a role in the Forex market.

The simple fact that you have money in your pocket makes you an investor in currency, particularly in the US Dollar. By holding US Dollars, you have elected not to hold the currencies of other nations.

Your purchases of stocks, bonds or other investments, along with money deposited in your bank account, represent investments that rely heavily on the integrity of the value of their denominated currency the US Dollar.

Due to the changing value of the US Dollar and the resulting fluctuations in exchange rates, your investments may change in value, affecting your overall financial status.

With this in mind, it should be no surprise that many investors have taken advantage of the fluctuation in Exchange Rates, using the volatility of the Foreign Exchange market as a way to increase their capital.

Example: suppose you had $1000 and bought Euros when the exchange rate was 1.50 Euros to the dollar. You would then have 1500 Euros.

If the value of Euros against the US dollar increased then you would sell (exchange) your Euros for dollars and have more dollars than you started with.

Example:You might see the following:EUR/USD last trade 1.5000 means One Euro is worth $1.50 US dollars.

The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.

The FOREX plays a vital role in the world economy and there will always be a tremendous need for the exchange of currencies.

International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Germany can sell products in the United States and be able to receive Euros in exchange for US Dollar.

RISK WARNING:
Risks of currency trading: Margined currency trading is an extremely risky form of investment and is only suitable for individuals and institutions capable of handling the potential losses it entails. An account with an broker allows you to trade foreign currencies on a highly leveraged basis (up to about 400 times your account equity). The funds in an account that is trading at maximum leverage may be completely lost if the position(s) held in the account experiences even a one percent swing in value, given the possibility of losing one's entire investment. Speculation in the foreign exchange market should only be conducted with risk capital funds that, if lost, will not significantly affect the investors financial well-being.

Veteran Trader Martin Maier is the Founder of Fenix Capital Management

He is the developer of various futures and commodities trading programs and his systems have been ranked and rated by various large American Investment Profile Rating Companies such as STAR and MAR.

Forex Technical Analysis Basic Concepts

Most forex traders around the world will agree with the trading school that considers technical analysis as the most precise way of trading the forex market. This trading school bases its confidence on technical trading by considering that all available information on a particular currency pair, along with its influence on the markets and the community of forex traders is already reflected in that particular currency price.

Even if you have barely look at one forex chart, I’m pretty sure that you must have noticed that the forex market moves along clear trends most of the time, and experience has shown us that these patterns tend to repeat with time, a useful characteristic that makes this market specially suitable for technical analysis tools to work at their best.

There is a saying among forex traders stating that those who trade with the trend will have a much higher probability of being profitable at the end of the session than those who haven’t learned how to pinpoint a trend in the charts.

Here is where technical analysis enters into the picture. In order to correctly determine the trend of the forex market you need to use the tools provided by technical analysis, also known as technical indicators. By using them correctly you will be way ahead of most traders that haven’t took the time to understand these great trading tools.

Also it is important for you to understand that technical analysis and its indicators are not magical or something that performs miracles for your trading account. You must have a criteria and be wise in how you manage the money in your trading account, so you won’t be left with a zero balance in a bad market move.

For example, two useful technical indicators are these: MACD and RSI. The first one stands for Moving Average Convergence Divergence and the second stands for Relative Strength Index.

The MACD indicator is used to plot the difference between a 26-day exponential moving average and a 12-day exponential moving average. Most of the time a 9-day moving average is used as a trigger line, what this means is that as the MACD crosses below this trigger it is a sell signal and when it crosses above it, it's a buy signal.

Now, the RSI is used to measure the market activity, in other words it monitors if the market is overbought or oversold. This way the RSI gives the forex trader an indication relative to the direction the forex market is moving. The higher the RSI number is, the more overbought the market is. The lower the RSI number, the more oversold the market is.

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Forex - What Advantages Forex Trading Has Over Other Investments

Forex or Foreign Currency Exchange Trading has become more and more popular among the investors in the recent years. There are few reasons why many investors choose forex trading over other type of investment opportunities.

Unlimited Earning Potential
Everyday nearly $ 2 trillion in different currencies traded in the forex market. This has made the Forex market by far the biggest and the most liquid financial market in the world. Due to the size of the transaction volume it's very hard to manipulate the market and your earning potential is unlimited. As such investing in Forex is one of the most stable financial businesses.

Forex Market Never Sleeps
Forex Trading can be done any time of the day, day or night as the Forex market is a 24 hour market place. This is because the banking organizations are always open to customers in the varying time zones all over the world. This is desirable for many people who are looking for an opportunity to do during their spare time since most of them have their day jobs and they only can do their Forex trading on part time basis from their home during the evening.

Transparency
The Forex markets are highly transparent where anyone can search for Forex information such as real-time news and analysis online with a click. With this real-time information a Forex investor/trader can do their own analysis such as risk management strategy to avoid unexpected "suprises".

Low Initial Investment
A trader can participate in Forex trading with a small account size (as low as $300.00). This is very good for newbie investors as some may want to "test market" with a small amount of capital.

No commission and exchange fees
No commission or transaction fee incurs in Forex trading. Most brokers offer commission free trading. The only cost a Forex trader has to pay in taking on a position is spread. The spread is the difference between the bid price (the price you sell at) and the ask price (the price you buy at). It's quoted in pips (1/100 of one percent). In some transaction, it could be as low as 1 pips for some pairs.

Leverage
If you invest in stocks market the amount of stock you can traded is limited by how much the capital fund (ie money) you have. This is not the case in Forex trading. In Forex trading, traders are permitted to trade foreign currencies on a highly leveraged basis - up to 100 times their investment. For example, you only need about $100 to trade $10,000 of a currency for a margin lending ratio of 100:1. An average Forex trader with a small trading account, says under $10,000 will be profit sufficiently from the movement of the currency exchange rate.

Profit in both rising and falling markets
In share market, an investor can only profit if the stock price goes up. When the stock price fall, the investor can either keep the stock hoping that the price will bounce back again in a later date or sell it off at loss. However in Forex trading, traders can profit from both bull (rising) and bear (falling) markets. As Forex trading involves selling one currency and buying another currency when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other- there is an equal opportunity for profit whether a market is rising or falling

Conclusion
With the above benefits, I believed that you are convinced that Foreign Currency trading is the best investment and income opportunity around. You do not need to be a rocket scientist, nor need a Degree or Diploma to trade in the Forex market. Many of the Forex traders have no financial knowledge before they involved in the Forex trading business. However you need a proper training to guide you to become a success Forex trader.

Did you find those tips on Forex Trading useful? You can learn a lot more about how to success in Forex Trading at http://www.squidoo.com/what-advantages-Forex-trading-has-over-other-investments

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This article was authored by Dickson Jiong. He current focuses in the Forex Trading as a work-at-home scheme. Want to know what works in the real world? Find out now at: http://www.EasyForexMoney.biz

The Basics of Forex

Learn forex market, or foreign exchange market, by understanding what happens. Well, currencies are traditionally traded against each other. Each pair of currencies is noted as XXX/YYY, and the first currency is taken to be the stronger of the pair, and the second is taken to be the weaker. If you want to learn forex market, know that today, it is a huge one, and according to the Wall Street Journal Europe, FX futures volume has increased so rapidly that now it accounts for 7% of the total volume of the foreign exchange market. Today, many developed countries over the world allow trading of FX derivative products.

If you want to learn forex market, you must understand how the foreign exchange market is different from the usual stock market. Well, in a stock market, everyone has access to the same prices. But in the foreign exchange market, there is a division of levels of access. At the highest, there's the inter-bank market, this is made up of the largest investment banking firms. Here, spreads (the difference between bid and ask prices) are sharp and sometimes unavailable, and players not privy to the inner circle do not know about the prices. There are also smaller investment banks, and large multi-national corporations, large hedge funds, and some retail foreign exchange metal market makers. Pension funds, mutual funds, insurance companies, other institutional investors have played important roles in financial markets, generally, and particularly in forex markets, since the beginning of the 21st century. Central banks show their participation in the forex markets too, to support currencies to their current economic needs.

There are lots of companies out there, which need foreign exchange for payment of goods and services. They play an instrumental role in the forex markets. They trade comparatively small amounts (compared to banks), however, they do affect the markets, and can sometimes have unpredictable effects. National central banks, too, are important. Inflation, money supply, interest rates, etc. are controlled by them, and sometimes, these banks dip into their foreign exchange reserves with the aim of bringing some much-needed stability to the market. It is a good idea for central banks to buy at a time when the exchange rates are low, and to sell when the rates are high - this way, there is a profit involved. This is how you can learn forex market.

LEARN FOREX MARKET | FOREX TRADING SYSTEM