The Foreign Exchange market is based on the simultaneous buying
of one currency and the selling of another. This means that now a trend
either up or down can be traded simply by interpreting which currency
will continue to be weaker or stronger relative to the other. Currencies
are available for trade 24 hours a day, 5 days a week. Being that the
currency market is the largest market in world, with daily volume of
over $1.4 trillion being bought and sold, the liquidity and time
availability of trading makes it one of the most potentially lucrative
markets available to anyone.
When you trade in currencies you are
trading in currency pairs (one currency relative to another), thus when
you buy a currency pair you are long the currency listed in the pair,
and thus expect it to appreciate. If you sell the currency pair you are
short, and expect the first currency listed to depreciate relative to
the second. Since these markets trade 24 hours a day, profits/losses
will fluctuate as the currencies values are always moving. Examples of
currency pairs include the EUR/USD, USD/JPY and USD/CAD.
All
markets have two prices at a given time. These prices are the bid and
ask, which reflect the price buyers are willing to buy at and sell at
respectively. When trading through a Forex broker if you want to buy you
will need to purchase at the ask price, and if you want to sell you
will need to do so at the bid price. The difference between the bid and
ask is called the spread - this is the cost of your trade. Since Forex
brokers do not charge commissions, this is how they make their money.
For the trader it is imperative to find a broker that offers small
spreads, as over time, larger spreads will significantly eat into
profits. ForexYard mentioned above offers tight spreads.
If you would like to know more, are interested in learning how to
start trading, need help with trading methods or want to know who to
trade with, visit me at http://www.vantagepointtrading.com
You will have access to tons of free information or you can contact me directly via the site and I would happy to help you out.
You will have access to tons of free information or you can contact me directly via the site and I would happy to help you out.
