Forex Trading – How To Trade

Foreign Exchange, Forex or Fx is the fastest growing market on earth with a daily turnover of over 2.5 trillion dollars. Traders include central and commercial banks, institutional investors, and private individuals like you. Trading Forex involves buying and selling of currencies of different countries. For instant, you can buy US Dollars with Euro or you might decide to sell Canadian Dollars for Japanese Yen. It is basically trading one currency for another. In trading Forex, you do not have to sell physical currency; you trade with your own base currency and deal with any currency pair you wish to.

Leverage.

Leverage is the ratio of investment to actual value. If for instance you are using a $1,000 to buy a forex contract of $100,000 value, you will be said to be trading on a leverage of 1:100 ratio. This means that with your investment of $1000, you can actually place deals worth $100,000. You cannot loose more than your $1000 but you can have gains many times greater than your $1000.

Profit.

Basically, making profit in Forex means buying low and selling high. The profit potential comes as a result of fluctuations in the market. You can for example buy your chosen currency at a low price and within minutes, the price can go up and you sell thereby making your profit. Fluctuations in the market are a daily occurrence.

Risks.

Traders are always strongly advised never to invest more than they are prepared to loose. However, you can never loose more than your investment. This is also called your margin. If you incur loses close to your margin, you will get a margin call from your broker and usually, you are expected to deposit more funds to be able to continue trading.

How To Start Trading.

To start trading forex, you will first of all decide on your broker. Then you will have to register and deposit the funds you are willing to invest. Your broker will provide you with a trading platform. Most brokers accept deposits through bank transfers, credit cards, paypal and other online payment solutions. Once you make your deposit then you can start trading. Also, you can monitor your trade online anytime and anywhere. You are basically in charge of your trading. You decide when to place deals and end your trades. You also decide when to withdraw your profits.

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