Many people, particularly in the present economic climate, think
that a quick and easy way to make some money is to trade on the Forex
market. However, trading currency is a high risk strategy and unless you
know exactly what you are doing, it is a fast way to lose capital.
Forex
is the buying and selling of foreign currencies. Originally this was
the domain of the big banks, but now anyone with a fast internet
connection can trade from their home. The idea is to buy another
currency that you think will increase in value in order to make a
profit. However for every trader who makes a profit there is another who
makes a loss and on the Forex market a small trader is competing
against the experience of the big institutions. 95% of all new traders
lose money. In order not to be a loser you need to really know what you
are doing and this is why a dummy trading platform is so important.
There
is a Forex money market open somewhere in the world around the clock,
as one market closes another opens. When the markets are busy the value
of a currency, particularly the most actively traded, can change
rapidly. Trading on the market is done through a broker, similar to a
stock broker although no commission is paid, instead there is a
difference between the buying and selling price. Buying a currency means
paying more than the selling price and the currency has to increase in
value by that amount before you can start to make a profit.
It is
vitally important that you understand the trading platform you are
using. Beginners are advised never to simply open an account and start
trading. It takes time, months in fact, to fully understand the market
and even the most experienced traders do not make 100% profits.
Fortunately brokers do not expect you to start trading immediately, the
majority offer dummy platforms where you can practise until you are
confident enough to commit your cash!
Platforms can be very
confusing to a newcomer and it is essential to understand exactly what
you are doing. When you feel competent open a mini Forex account with a
few hundred dollars and start trading small amounts using stop/loss
orders to prevent losing all your investment if the market moves against
you.
Forex currency trading is not for everyone. Never invest
what you cannot afford to lose. This article is for information only and
the author accepts no liability for any action taken.
For more information on trading Forex visit the Forex Trading Articles [http://www.forex-trading-articles.com] website
