A guide to starting to trade in foreign currencies

Forex or the foreign exchange market is the largest (and oldest) financial market. Some $4 trillion is traded every day, 10 times mores than any stock market around the globe. It is a market which is open 24 hours a day, unlike the stock market, and because it is no longer dominated by large banks and dealers anyone can trade today at any time of day or night. This is because brokers are now able to break down the larger inter-bank units into smaller units which are then offered to smaller dealers.

What is forex?


Forex trading is a relatively straightforward matter of trading one currency against another. Traders aim to buy when the value of one currency compared to its partner is low and to sell it when the value has increased.
The currencies most frequently traded are the US dollar, the pound sterling, the euro and the yen. A successful trade is one where the trader predicts correctly that his or her chosen currency will rise in value against another. For example, he might predict that the US dollar is about to gain value against the pound. He will then buy US dollars with pound sterling and sell them again when the exchange rate of the two currencies rises and so makes a profit.

The trick of course is to guess which currency is likely to rise in value and all traders therefore pay very close attention to the money markets. The most commonly traded pairs of currencies are the euro against the US dollar, the US dollar against the Japanese yen, the British pound against the US dollar and the US dollar against the Swiss franc.

Forex trading is particularly popular today because it is possible to make a profit whether your own currency falls or rises in value.

Choosing the best platform

The first step to take when trading in foreign currencies is to pick a platform to work with. The iforex platform is simple to use and offers plenty of support to the novice trader. If you would like to start trading with iforex for the first time, the best advice you can find will encourage you to open a demo account in order to learn the ropes.  Setting up a demo account will enable you to find out how the platform you have chosen works. Spend as much time as you can educating yourself so that you are familiar with the language of forex trading. Once you feel you have a firm grip on the notion of leverage, pips, open trades and margin requirements, being to trade with your demo account. Only risk real money when you find that you are consistently making a profit on the demo.

The benefit of leverage trading is that it is possible to trade large positions with a relatively small amount of money in your forex account. Profits can therefore be amplified which is what makes forex trading so attractive to many. However, it must always be remembered that losses can be also be amplified and that leverage can and often does lead to the loss of large sums.



Image credits: http://www.flickr.com/photos/renaissancechambara/5060746658/

Source: http://www.dailyfx.com/how_to_trade_forex/learn_forex

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