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The Foreign Exchange – Better Understand Currency Trading

The Foreign Exchange – Better Understand Currency Trading

Some Basic Forex Information

When covering the foreign exchange market, a good place to start is with the basics. The foreign exchange market is an ever growing liquid market of simultaneous trading of one currency for another that takes place 24 hours a day. It’s not the traditional trading market since there is no central trading location. Most trades are done by telephone or electronics trading networks.

An exchange rate is the worth of one currency articulated in expressions of another.

A dealing spread is issued to you by a dealer that is the buy and sell level that you would need to agree to for a trade to be considered done which is usually 3-5 points.

The Advantages

The Forex trading market allows exchangers to shift large amounts of money in and out of positions easily. This advantage is called:

High Liquidity

Another exciting advantage is how much time you can spend in the market trading, which is 24 hours a day from Australia’s Sunday night to the market closes in New York on Friday.

-24 Hour Market-

Since there is liquidity in the market, you can also take advantage of the rising and falling prices. Meaning you can buy if you believe the value of the currency exchange will increase or you can sell if you believe the value of the currency exchange will decrease.

Turnover Potential From Rising and Falling Prices

The power of a trader to use leverage in the market is also a great benefit. This is the capability to buy and sell more money than your account actually has in it.


In the foreign exchange market, the cost for the transaction is usually included in the price. This is the spread.

Low Transaction Cost

*The Forex market is believed to be easier to predict since there isn’t a significant number of major currencies. This point is disputable though.

Simplicity of Study

Trading Strategies

There are many ways of going about trading recently that are reported to be successful.

1. First is the Scalping Method. Forex scalping has a shorter market exposure than regular trading which in turn is much less exposed to market risks.

2. Mention earlier is the term leverage. Leverage is used, as a trading strategy as well because you can get hundreds if not thousands more money in order to trade with… this is not for the novice Forex trader.

3. Currency trading along with the Market Cycle – Understanding the currency market cycle, since the supply of money is intimately correlated to the worth of currency, the Forex market responds along with the development of the currency market cycle.

4. The Next strategy to try would the Stop-Loss Order Strategy. This is just recognizing the point at which you will no longer trade. You do this before you commence to trade.

5. The straightforwardness and lucidity of trading Pegged Currencies is also a supreme strategy. This is when the value of a currency is coordinated to that of a different asset.

6. The next and final strategy people are taking advantage of is Automated Forex Trading Systems. Over the past few years these Bots have become very well integrated and some can be deemed quite successful.

Ten Trading Tips!

1. Diversify You Portfolio. There are risks with just about everything you invest in, don’t put all your peas in one pot so to speak. Fx trading might not be for everyone and if it’s not for you, try you luck at the stock market.

2. Can’t Win All the Time. You should have a long-term goal of future winning because sometimes your going to lose and the trick is to take it in stride.

3. Don’t Trade With Emotion. This almost goes without saying since making money calls for clear headed decisions based on facts and not how you feel.

4. Get the Facts. This is a subject in which you want to do lots of research. Making an uneducated trade(s) can end up costing you dearly.

5. Game Plan. Living in the moment will get you no where in the market of Forex. You have to have a game plan and stick with it.

6. Practice Makes Perfect aka Better. A good thing to do before you ever start trading with real currency is trade with no risk

7. Know Your Currency. You want to come to understand what drives a currency’s performance.

8. Understand Strategy. Implement the Strategies.

9. Risk What You Can. As with any type of investment you should invest what you are willing to lose considering the risks involved.

10. It’s What You Know. You should try to deal only in the currency pairs you are most familiar with until you become better acquainted with the market.

Bots and their Benefits

There are benefits of using an automated trading system, but it isn’t as easy as pushing a button and watching the money pour in. See, YOU have to do some market research to see what currency pairs work best together at that given time. Then once you have made that discovery, the bot will execute trades for you. You can’t simply just leave it and expect consistent profits because a pair does well one day since it may not do so well forever. Therefore, you must be proactive.

Key Points:

+They Never Sleep- 24 hrs a day for five days isn’t possible for a normal person to constantly watch the market. That’s a job a robot could handle.

+Constant- These bots stay consistent with what they are asked to do in a market.

+Calculating- Automated trading systems use built in equations to answer to judge what to do in a market. No emotions involved.

+Multi-Tasking- These systems are able to trade multiple currency pairs in different scenarios concurrently.

+Doing the Work- Saves you the trouble of learning all the ins and outs of the foreign exchange market since it already knows.

+Helping- Even for those more experienced, it can help validate decisions

*It’s Simply Simple- not difficult to configure or use

Some Venues to Trade Fx for Practice and for Real

There are many places to trade. Here are some!







And so on….

It must be reiterated that Forex Trading is not only very lucrative but also very risky. Trade at your own discretion and only risk what you are will to lose.