Forex Trading the Foreign Exchange FX Currency Markets

An Explanation of Forex Trading

Forex trading means the simultaneous buying of one currency, and selling of another. The currency of one country is exchanged for that of another. The currencies are always traded in pairs such as US Dollar/Japanese Yen (USD/JPY), Euro/US Dollar (EUR/USD), Great Britain Pound/US Dollar (GBP/USD).

More than 80% of daily forex trading involves major currencies like Australian Dollar (AUD), British Pound, Canadian Dollar (CAD), Japanese Yen, Swiss Franc (CHF), and the US Dollar. Forex Trading is not centralized on an exchange. It is a 24-hour market, and trading moves from major banking centers like Wellington, Sydney, Japan, London and New York – in that order.

In Forex Trading, there is a bid price and an ask price, and the difference of the two is called the spread. The bid is the price at which buyers are willing to buy, and the ask is the price that sellers are willing to sell at any given time. The prices are always 5 digit numbers, irrespective of where the decimal point is placed. For example, EUR/USD has a bid price of 1.2641 and an ask price of 1.2644, thereby yielding a 3 pip spread. In another example, the USD/JPY bid price is 107.09 and ask price is 107.12.

A transaction takes place when one currency is on the up, and another is going down. Choosing the right currency will ensure a profit.

Margin is collateral for a position. If the market moves downward, the forex trader will ask the investor for additional funds by way of a “margin call”. In case of insufficient funds, the trader will close the open positions immediately.

A “long” position is one in which the investor buys a currency at one price, with the expectation of selling it later at a higher price. A short position is one in which the investor sells a currency with the expectation of buying it back at a lower price, expecting the currency to fall. Every forex trading position taken means that the investor has gone long in one currency, and short in the other. Forex Broker Info provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. Forex Broker Info is the sister site of Incorporating in Florida Web.

Forex Trading News

FOREX-Dollar on defensive after solid U.S. payrolls - Sun, 05 Sep 2010 21:09:10 -0700
FOREX-Dollar on defensive after solid U.S. payrolls

FOREX-Dollar on defensive after U.S. payrolls - Sun, 05 Sep 2010 18:20:38 -0700
FOREX-Dollar on defensive after U.S. payrolls

Forex Strategy Corner: Bollinger Bands Techniques for Trading - Thu, 02 Sep 2010 12:11:48 -0700
Bollinger Bands have long been one of the most popular technical indicators across financial markets, and many forex traders use them regularly in their day-to-day trading. The key question to ask of any forex analysis technique is nonetheless clear: how effective is the Bollinger Bands indicator as a forex strategy?

FOREX: Ringgit Opens At 13-year High On Strong Demand For Local Currency - Sun, 05 Sep 2010 19:40:04 -0700
KUALA LUMPUR, Sept 6 (Bernama) -- The ringgit opened 13-year fresh high against the US dollar in early trading on Monday on strong demand for the local currency, dealers said.

Forex: GBP/JPY pick up to 130.40 from 129.80 low - Sun, 05 Sep 2010 17:58:28 -0700
FXstreet.com (Barcelona) - The British Pound was able to recover the lost ground in pre-market trading, as investors snapped the price back up towards 130.50 again, matching its closing price from Friday, to even trek slightly higher, hitting an intra-day high at 130.58. Afterward, a weak hold led to a minor retreat at 130.35, current price.

RELATED ARTICLES

Calculating FOREX Profits and Losses
FOREX currencies are traded in much smaller divisions than cash. Whereas the smallest division in US cash is the penny ($0.01), US currency can be traded on the FOREX in divisions of $0.0001. This smallest division is called the pip (short for Price Interest Point - sometimes just called 'points'). Since currencies are traded in large lots of (say) $100,000 - small movements in value can generate substantial profits and losses. In a lot of US$100,000 one pip is worth $10 so an increase in 40 pips (4/10 of one cent) can generate a profit or loss of $400.

FOREX Brokers
Most FOREX traders use a broker to handle their transactions. What exactly is a broker? Strictly speaking, a broker is an individual or a company that buys and sells orders according the investor's decisions. Brokers earn money by charging a commission or a fee for their services.

FOREX Signals
One of the disadvantages of FOREX trading is the time investment needed to monitor the markets for advantageous entry and exit points. It's possible to sit in front of a computer monitor for hours watching the markets.

FOREX Trading Strategies
To be a successful FOREX trader you need a trading strategy. There is no one set strategy that is good for all traders; rather, each trader needs to develop his or her individual approach to the FOREX. Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the market and for plotting entry and exit points.

FOREX Training
Knowledge is the key to successful FOREX trading. The knowledgeable trader has greater awareness of how the market moves and more chances of making profitable transactions. Without knowledge you are shooting in the dark. You may succeed on a few deals but the odds are that you are going to lose in the long run.

FOREX versus Stocks
Stocks have been a popular investment for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company.

How to Read FOREX Quotes
Currency prices are determined by a number of factors, the most important of which are economic and political conditions in the issuing country. Political stability, inflation, and interest rates are all factored into the price of any currency. In addition, governments can try to control the price of their currency by either flooding the market (to lower the price) or buying extensively (to raise the price).

Introduction to Fundamental Analysis
FOREX traders almost always rely on analysis to make plan their trading strategies. There are two basic types of FOREX analysis - technical and fundamental. This article will look at fundamental analysis and how it used in FOREX trading.

Risks of FOREX Trading
Despite the claims you may see on some FOREX web sites, FOREX is not risk-free. You are trading with substantial sums of money and there is always a possibility that trades will go against you. There are several trading tools, however, that can minimize your risk, and with caution, and above all education, the FOREX trader can learn how to trade profitably and while minimizing losses.

Trading Currencies on Margin
The key to FOREX popularity is margin. Without margin, the FOREX would be beyond the reach of the average investor. So, what exactly is margin and how does it work?

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