Forex Trading
Forex Trading, or in other words, Currency Gambling
As traditional online gaming activities become more constricted, many people with gambling in their veins have shifted their attention to the Foreign Exchange market, or Forex (FX), as its known for short. The whole idea is to speculate that the currency which you buy at one rate will shift to another rate that allows you to make a profit. When you do so, youll be joining the largest financial market in the world, with a daily average turnover of well over US$1.5 trillion. The FX market is 40 times larger than the combined volume of all U.S. equity markets.
The Majors
Trading in foreign exchange currencies is done in pairs, for example simultaneously buying Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). The most commonly traded (and therefore most liquid) currencies are called the Majors. Over 85% of all daily transactions involve the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
Forex trading is a truly 24-hour market. It begins each day in Sydney and moves around the globe as the business day starts in each financial centre, progressing to Tokyo, then London and then New York. The only rest day is Sunday, when trading is not available between 14:00 and 19:00 GMT.
Technical Terms
When you buy currency at a specific price, this is called "opening the position". Selling the currency at a different value is called "closing the position". You can use the resources on a Forex web site (such as http://www.easy-forex.com) to check on currency trading prices and get news updates from all around the world. This will help you to determine your own pre-set rates.
You should note that due to the fluid nature of the Forex global market, 100% guarantee to pre-set rates is impossible. However, in most cases, your Forex Internet platform provider will make all efforts to guarantee the rates.
You can change your pre-defined rates at any time while your deal is open. This includes placing Stop-Loss and Take-Profit orders. Take-Profit orders are used to lock in profits in the event the rate moves in a favorable direction and give you a degree of security. For example, you may spend 10,740 Yen to buy $100 worth when the rate is 107.40 yen per dollar order. You set the Buy Rate at 108.80 Yen. Once the price reaches 108.80, the order is automatically executed to sell $100 and buy 10,880 yen, giving you a profit of 140 Yen.
A Stop-Order is an order placed to sell a currency when it reaches a certain exchange rate. It is designed to limit your loss. For example, you can set a stop-loss order for 10% below the price you paid for a currency, thereby limiting your loss to 10%.
Starting out and Funding
A good way to start becoming familiar with Forex sites is by using the Demo or Practice Play channels. You can then shift over to Real Money with amounts as low as $50. As you increase your experience level and scope of activity, you can raise the amounts that you trade. You can fund your account with your credit card and start trading immediately, regardless of banking work days or hours. Some sites also allow you to freeze the Buy or Sell rate for a few seconds, irrespective of rate movements, so that you can decide whether to make the deal or not.
Winning at Forex
To win in Forex trading, the three most import points to remember are:
1) Keep it simple ensure that your trading regimen and trading rules stay simple and easy to apply.
2) Dont care focus on the larger picture and not just on individual trades. It is important to stay cool and unstressed so that you avoid making mistakes.
3) Find an edge its a good idea to learn about trading systems while you are still in Practice mode. One useful link for this is http://www.easy-forex.com/Gateway.aspx?gid=80304
4) Is Trading seen as Gambling?
Officially, Forex is not seen as gambling, which is why it is freely allowed on the Internet. There are similarities and differences. Gambling and Trading can both seem random and both have more losing participants than winners (terminology is also similar). However it is argued that trading creates value while gambling exists just for entertainment. These are fine points, since over 90% of Forex deals are conducted by small-time speculators looking for fast profits. Unlike gambling in casinos, Forex gambling activity is relatively low in risk as the foreign exchange market is the biggest liquid financial market.
