Beginner Guide to Basic Forex Trading
Pick Up Forex Trading Now!
The name Forex, come from Foreign Exchange Market, which also referred as “Forex” or “FX” in short. Basically it involves a pair of money. Meaning you buy a money in exchange to another country money.
For example if you visit Hong Kong from US. What would you do? Go to the money changer, use your US dollar to exchange for Hong Kong dollar right? By doing so you are truly selling your US dollar and buying Hong Kong dollar so that you can use in Hong Kong. So if you return to US, you too will exchange your Hong Kong dollar to US dollar. Now you are buying back US dollar and selling your Hong Kong dollar. By now I hope you get the idea of basic money trading.
So why trade Forex, you may ask? Well Forex is a 24 hours market and it is one of the largest markets in the world in term of daily quantity. It trade quantity range from 1 to 3 trillion USD every day. This is 6 to 8 times higher than the quantity of the stock market in the world. It provides a lot of liquidity in the market. The large quantity of participants also reduces opportunities for insider trading. To put thing to simple, there has NEVER been a case of complete money collapse in a developed country.
For Forex trading is there is no restriction of short selling. Meaning you can buy (Long) or sell (Short). This average you can easily trade in a rising or falling market.
Another great advantage of Forex Trading is leverage. Typically leverage increases your buying strength. With this you are able to increase your total return on investment with less cash outlay. Of course increasing leverage increase risk too. However if you know how to manage your risk, this should not be a problem. Example if you have only $1000 dollar cash in a forex margin account, and a 200: 1 leverage, you can trade up to $200,000 in notional value.
Here is only some of the basic information on Forex Trading. To pick up forex trading, you may search more information in the internet or buy some books on Forex to read. Understand the basic foundation of Forex is a must!