For those who have heard but don't know much about forex trading,
read further, to know what exactly forex is trading and what are the
modalities involved. Forex or Foreign Exchange trading is the trading of
currencies of different countries by brokers called forex traders at a
market called the Forex market.
Through forex trading a broker
aims to profit from the fluctuations in the foreign currency. When a
forex trader buys currency, he is said to be 'long' on that currency and
when he sells, that currency he is said to be 'short' on that currency.
As the value of one currency increases rises or falls, traders decide
if they want to sell or buy that particular currency.
In the forex
market, currencies are often quoted in pairs, like GBP/USD, or USD/EUR.
The first of this currency is base currency and serves as the basis for
which you buy or sell. The second is the counter or quote currency. For
example when you buy EUR/USD, you have bought EUR, by selling USD.
Forex
trading is a very profitable way to make money, but it can be risky as
well. You need to be aware of the latest currency rates. There are a
number of tools that help you calculate the exchange rate. One such
example is the currency calculator, which determines, the value that you
would get in return for your investment.
Within the forex market,
there are several small forex markets that trade in various currencies.
The most commonly traded currencies are the USD, the Australian Dollar,
the Japanese Yen, and the European Euro. The values of these would
change according to the market that it is trading in. This is a 24 hour
market, so the value of dollar can be different according to the market
that it is in.
Getting started in forex trade is simple. You need
to first choose an online broker who deals in forex trade. This is a
very important choice, hence be very careful. Try and avoid the fly by
night operators, who would lure you with all sorts of gimmicks. Remember
the old adage, if something is too good to be true, it probably isn't!
Choose a broker who has a clean reputation. Figure out how much money
are you going to invest in a forex trading account. For those who are
new, to the forex trade, you could choose from the many mini forex
trading brokers. Through these platforms you can trade in smaller
amounts and thus minimize the risk. They serve as a playground for the
real battle ground. The next step is to open a trading account, by
completing the requisite formalities.
Although the risk is high, forex trading is a lucrative business.
Mini forex trading is ideal for individual traders who want to learn the ropes of forex trading without burning their fingers.
