When you buy shares, you can only profit when the price of your share goes up. When you
suspect that it is about to go down or that it is just going to be moving sideways, then the only
thing you can do is sell your shares and accept your losses. This is the chief reason why many
people are leaving stock trading and moving to online forex trading.
In the currency market, you can buy or sell a currency pair regardless. If you think the price is
going to go up, then you buy. If you think it is going to go down, you sell. It’s as simple as
that. This simplicity is why many people refer to it as the eternal bull market – it’s always a
good marketplace to trade in.
what is the forex trading?
What is foreign exchange trading?
The foreign exchange market is where foreign currencies, such as the Euro and the US Dollar,
are bought and sold by individuals, companies, financial institutions and international banks -
everyone if fact, who is looking to benefit from the huge potential for profit from speculation.
Foreign exchange trading has many names; some of the most popular are forex, fx and
currency trading.
When you buy and sell foreign currencies, you are buying one currency against another. This
means that when you see EUR/USD on a trading platform, you can either buy or sell this pair.
If you choose to buy, you will be buying Euros with US Dollars. If, on the other hand, you
decide to sell, you will be selling Euros with US Dollars.
The currencies explained:
EUR = Euro
USD = United States Dollar
GBP = British Pound
JPY = Japanese Yen
The power of leverage
There are not a lot of banks or people who would lend you money for you to trade shares with.
And if there were, it would be very hard for you to convince them to invest in you and in your
idea that a certain share is going to go up or down. Therefore most of the time, if you have
USD 10,000 in your account, you can only really afford to buy USD 10,000 worth of stocks.
When you trade currencies however, you mostly trade on ‘borrowed money'.
And if there were, it would be very hard for you to convince them to invest in you and in your
idea that a certain share is going to go up or down. Therefore most of the time, if you have
USD 10,000 in your account, you can only really afford to buy USD 10,000 worth of stocks.
When you trade currencies however, you mostly trade on ‘borrowed money'.
Volatility creates opportunity
One of the other most common statements made about the forex market is that it is highly
volatile. But what does this mean for you?
The high levels of volatility mean that the buy and sell prices of each currency pair can go up
and down very quickly creating a constant stream of trading opportunities. The high volatility
of the currency market offers forex traders the potential to earn 5 times more money from
currency trading than from trading the most liquid shares.
volatile. But what does this mean for you?
The high levels of volatility mean that the buy and sell prices of each currency pair can go up
and down very quickly creating a constant stream of trading opportunities. The high volatility
of the currency market offers forex traders the potential to earn 5 times more money from
currency trading than from trading the most liquid shares.
Trade with the world
The currency market is an over-the-counter (OTC) market which means that there is not one
specific location where buyers and sellers can actually meet to exchange currencies. Instead,
transactions are conducted online or less often nowadays by phone.
This is important as you can trade 24 hours a day from the opening times of the Far East
markets (21:00 GMT) on Sunday evening, until closing time of the New York markets (21:00
GMT) on Friday evening – no other trading opportunity offers you this many hours of
opportunity to trade with investors around the world.
specific location where buyers and sellers can actually meet to exchange currencies. Instead,
transactions are conducted online or less often nowadays by phone.
This is important as you can trade 24 hours a day from the opening times of the Far East
markets (21:00 GMT) on Sunday evening, until closing time of the New York markets (21:00
GMT) on Friday evening – no other trading opportunity offers you this many hours of
opportunity to trade with investors around the world.
Size is important
You will often read or hear that foreign exchange is the largest market in the world, with daily
trading volumes of nearly USD 2 trillion. But what does that mean to you, the trader?
The fact that so much money is traded every day is important for one prime reason: It means
that you will always find a buyer when you want to sell, and you will always find a seller when
you want to buy. You will never have to wait to buy or sell currencies online.
trading volumes of nearly USD 2 trillion. But what does that mean to you, the trader?
The fact that so much money is traded every day is important for one prime reason: It means
that you will always find a buyer when you want to sell, and you will always find a seller when
you want to buy. You will never have to wait to buy or sell currencies online.
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