Welcome to Trading Guide
Trading Strategy Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
All About Forex Trading
from:
Overview
Forex trading, short for foreign exchange trading, involves the buying and selling of the many currencies of the world. It does not operate via a central exchange site, like traditional stock market trading, and may, thus, fully function a 24-hour basis.
When compared to other exchanges, the forex trading market is the largest in the world, even beating the New York Stock Exchange (NYSE) by over a hundredfold, in terms of daily trading volume, most of which are conducted by private entities and individuals.
Because of the absence of a central exchange, forex trading happens between two parties directly. Buyers and sellers communicate and trade via the phone, the Internet or other communications networks worldwide.
In addition, trading forex is also speculative, meaning, they are based on expectations on whether a certain currency would rise or fall, depending on current market conditions. It is risky business, but the returns have often proved themselves worth the risk.
Basic forex trading
Forex trading involves the buying and selling of two currencies at the same time. This combination is often dubbed a cross, because it occurs between two moneys; for instance, the US dollar/Japanese Yen. The highest traded currencies in forex are the US dollar, the euro, the Japanese yen and the UK pound -- the "majors".
Trading normally occurs in the spot market, which is the largest because of its volume. Here, trades are made and completed directly and on the spot. You don't have to wait too long to settle.
Advantages of forex trading
1. No 4pm trade closing time.
When you're trading forex, you have 24-hours to do so from Sunday night to Friday night. This opportunity allows you to retract your moves and react immediately when a currency suddenly goes up or down. Breaking news are vital to forex trading.
2. Very liquid.
It is easy to convert your trades to cash in the forex market, especially if yours involves one of the majors. The high liquidity helps ensure that spreads are narrow and prices are stable throughout the period.
3. Strong potential for profits
This is particularly true with falling currencies. Because forex trading involves two currencies, when one rises, the other naturally falls. When a currency depreciates, it could be the perfect time to buy into it so that you can sell it for a hefty profit when it's its turn to appreciate.
4. The higher the currency's liquidity level, the cheaper it is to trade it.
This is why most forex trading patrons opt to trade majors, because they have the highest liquidity. In addition, forex trading is also more attractive to some money movers because of the absence of a commission. Thus, currencies are actually traded for their real merits and not because they come with misleading incentives.
There's a lot more to learn about forex trading and the above merely scratches the surface. To be able to further understand what forex trading is and how it can help you grow your coffers, it is advised that you speak to an expert who more likely has all the answers to your questions. Or, yet, ask somebody who's already had experience with forex trading.
Trading Strategy Specific links
Trading Strategy News
Forex Impact Reveals Gap Trading Strategy That Has Been Proven To Be Right 89.1% Of The Time Over The Past 9 Years
Forex Impact explains their tested gap trading strategy that takes advantage of the resulting gap in currencies between the time the market closes and opens every week.Austin, TX. (PRWEB) January 30, 2012 Forex Impact has been researching, and testing a gap trading strategy for the past 9 years, that has been proven to be 89.1% accurate. This means, 9 out of every 10 trades are profitable. This ...
Read more...You Can Beat This Patently Absurd Trading Machine
Save your portfolio from the high-frequency terminators.
Read more...The Power Of Social Media: Influencing Trading And The Markets
Check out the growing power of social media, and how it is being used to predict and influence investment markets.
Read more...Worst Case Scenarios
FACTS ARE SACRED “Periods of drawdown occur in every strategy, accept this as fact and move on.” – Ryan Schofield “There’ no such thing as the best trading strategy. For a successful trader it’s far more important to employ different trading strategies simultaneously. There are good and bad times for every strategy.” – Frank Hassler [.
Read more...Ex-MF Global risk chief said warnings likely played into his firing
Around the time Michael Roseman raised his first red flag about the trading strategy his boss, Jon Corzine, was pushing, a headhunter contacted the man who eventually would replace him as MF Global’s chief risk officer
Read more...