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A Guide to FOREX Trading

The foreign exchange (FOREX) market is the purchase or sale of a currency against sale or purchase of another. The object in Forex is to exchange one currency for another in the expectation that the price will change so that the currency you bought will increase in value compared to the one you sold. Through Forex education and training it is possible to speculate the direction of the market and receive a good return on your investment.

The major participants in the FOREX include commercial and investment banks and central banks. Other participants include corporations, hedge funds, and millions of speculation traders like you. Some of the top banks in the world such as Bank of American, Credit Suisse, and Morgan Stanley are major players when it comes to the FOREX. In order to make money within this realm, you will be competing against all of the major banks as well as individual traders.

When beginning in the FOREX, it’s important to select a reputable broker. After all, the broker is going to be the one paying you when it’s time to cash out. A broker acts as a middle man between you and the FOREX. When you place a trade in the FOREX, your position is filled by the broker and the broker sends the order off to the banks. When it’s time to be paid, your money is with the broker and they need to be able to cover your positions in the market. Most brokers offer a 3 to 5 pip spread on all the major currencies pairs, such as the ERU/USD, GBP/USD and the USD/JPY. A 3 to 5 pip spread

basically means that the FOREX must move 3 to 5 pips before your trade is in profit. One pip can be worth any amount, depending on how much money you’re willing to risk per trade.

There are two types of traders, fundamentalist and technical traders. Fundamentalist study the cause of market movement, whereas technicians study the effect. Most traders identify themselves as both a technician and fundamentalist. Most fundamentalist will have knowledge of charts, indicators and chart analysis. Similarly most technicians are aware of the fundamentals. However, the problem is that the charts and fundamentals are often in conflict one another. It’s usually a wise decision to have a bit of training in both fundamentals and technical analysis.

One of the most important factors in the FOREX is learning to manage your money. Traders will experience losses in the FOREX; therefore it is essential that a trader utilizes proper money management. In many cases money management is a simple concept, yet to practice money management consistently is very challenging. Generally speaking money management is knowing when to cut your losses. For each trade, a trader should be looking to make three times the amount they plan to lose. This way a trader only has to be right 33% of the time in order to be in profit.

Tim Rohrer is an established writer and FOREX trader. To learn more about FOREX trading, visit http://www.forex-investing.us


Written By: Timothy Rohrer




Investment Markets

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Reuters - 7 hours ago
By Steven C. Johnson NEW YORK, Nov 20 (Reuters) - The dollar and yen rose against the euro and other currencies from countries with high interest rates as ...
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Reuters - 3 hours ago
By Gertrude Chavez-Dreyfuss NEW YORK, Nov 20 (Reuters) - The US dollar slumped versus the yen on Thursday, squeezed by Wall Street's plunge as fears of a ...

Reuters

FOREX-Recession fear sweeps yen up; high-yielders fall
Reuters - 13 hours ago
The dollar was down half a percent at 95.45 yen , while the higher-yielding Australian dollar tumbled roughly 2 percent to 59.76 yen . ...
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FOREX-Yen advances vs dollar, euro, stocks eyed for direction
Reuters - Nov 19, 2008
By Steven C. Johnson NEW YORK, Nov 19 (Reuters) - The dollar fell against the euro and sterling on Wednesday as US stocks stabilized and big buy orders for ...
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istockAnalyst.com (press release)

Forex Markets: A Look Into The Dollar Part I
istockAnalyst.com (press release), OR - 10 hours ago
... relationship of the Dollar and Euro, and how commodities as well as inflation have played a central role in the forex markets over the last two years. ...

Euro Forecast to Decline Further Against US Dollar on Forex ...
Daily FX, NY - 7 hours ago
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Forex Interplay: Dancing Around the Dollar
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CEP News

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Reuters - 15 hours ago
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FOREX-Dollar rises vs yen, US stocks dictate direction
Reuters - Nov 18, 2008
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