'Forex Trading' is a
contraction of 'Foreign Exchange Trading', and is interchangeable with
'Foreign
Exchange Market' and 'Currency Market'. At the simplest level trading
in Forex is about buying one form of currency, and selling it in
exchange for a different currency, making a profit as you do so.
For
example, if you purchase a sum of money in one currency, and then a few
weeks later the exchange rate fluctuations mean that the value of that
currency has grown relative to a different currency, then you might
sell that sum in exchange for the other currency, effectively
increasing the value of the sum you started out with.
Many people assume that
to have any success with Forex trading you need a real understanding of
how foreign markets work, of trading
in
currencies and of carrying out
detailed financial research. In fact whilst this is all certainly true,
there's something else which is perhaps more important, and that's
simply an awareness of what is going on in the world.
If you
read or watch the news, and have a reasonable idea of what's happening
politically in terms of the relationships between various countries
then you have a sound basis for moving into trading in foreign
currencies.
For example, if you had purchased a stock of
Euros a few weeks ago you may well have watched the news and seen
Greece's financial problems escalating, and you may have guessed that
this could have a detrimental effect on the value of the Euro in
relation to the US dollar This would in turn have led you to convert
your Euros to dollars. In fact Greece's problems did result in a
significant fall in the value of the Euro, and those who moved into a
different currency early on made either the most profit, or the lowest
losses.
How
to Start Trading Forex
But obviously whilst a sound understanding of how the behaviour
of the leaders of various countries may affect the exchange rates, it's
also important to have a sound understanding of how the foreign
currency trading system works. There's nothing like practical
experience to help you achieve this, but practical experience can be
expensive.
That's
why it's often
recommended that for anyone starting out Trading in Forex it is best to
open a
demo account and try your hand at virtual foreign currency trading.
This allows
you to gain practical experience without risking your own cash.
One
thing which you will
often hear is that Forex Traders have a gut instinct, and work very
much on gut
feeling. If you believe this then you're best off forgetting foreign
markets
and instead take up Blackjack or Roulette.
Successful trading in Forex requires careful analysis, sound
plans and specific goals, and it requires note taking and a good deal
of
learning from mistakes and successes. This is why it is particularly
important
to try virtual
Forex trading before 'spinning the wheel' and losing
large sums
of capital you can't afford to.
Free
PDF
Elliottwave
Guide
Free to
download, the Traders
Day Trading free Elliott
Wave Theory PDF quick start guide. Download it free now
for a quick
overview of the basics.
It is a handy reference guide to the
basics of the wave patterns and wave formation.
