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Understanding the Basics of Forex Trading

basic of forex

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5 replies to this topic

#1
RusefTrader

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With the advent of globalization and communication technology, traders now enjoy the ability to profit across all countries and economies. Regardless if you are a trader sitting in New York or Shanghai, you can grow your portfolio by capitalizing upon the Forex trading of the Japanese Yen or the Indian Rupee.

Subsequently, the foreign currency exchange, also known as Forex trading, has grown to be the largest financial market - with over 3 trillion US dollars traded each day. Most of this Forex market is traded by private investors and traders, who see the ripe opportunities that exist in Forex trading.

The basics of the Forex trading market - The Forex trading market operates 24 hours a day, allowing traders to capitalize upon profit opportunities throughout the world. Whether by telephone or the internet, the Forex trading market is constantly connected, affording currency traders the ability to seize profitable trades, regardless of their local time zones, market hours, or country boundaries.

The foreign currency trading market is commonly referred to as the interbank market. Forex trading involves the buying of one currency and the selling of another. The particular currency combination is referred to as a cross (for example, the Euro/GB Pound, or the US Dollar/Japanese Yen.).

Types of Forex trading strategies - The largest volume of trades occurs in what is called a spot market. It is referred to as the spot market because trades are instantaneously settled, or "on the spot."

Another type of trade using Forex trading strategies involves "forward outbreaks." Although the trade itself is carried out immediately, settlement on the value date involves a small interest rate calculation which is usually insignificant, unless the position is held for a long time. The interest rate differential varies based on the currencies traded. This differential in interest rates between the two countries involved can produce a positive or a negative differential, which is calculated and added to your account.

Increasing your Forex trading power - Because Forex trading is done on margin, the amount of assets controlled is far greater than the funds in an account. As fluctuations in currency exchange rates on any particular day are small, the fact that trading is done on margin allows for profitable Forex trading strategies. None the less, it should be noted that trading on margin can greatly increases your risks. Because of this aspect, any new investor should thoroughly learn Forex trading through Forex courses.

The Benefits of Forex trading - Forex trading offers multiple advantages to other financial investment markets. One of the principal advantages is the fact that trading occurs around the clock, allowing the investor with the appropriate Forex trading strategies to immediately take advantage of opportunities. The Forex market is the most liquid in the world, allowing for price stability and narrow spreads.

Since currency exchange rates are always changing, Forex trading opportunities are continuous, regardless of which direction the currency is moving.

The interbank market is also often traded without commissions, which makes it attractive to an investor who wants to trade frequently. However, for ease of transaction, Forex trading also occurs on futures exchanges.

However, as with all currency trading strategies, there is no reward without some risk. Any investor contemplating foreign currency trading should thoroughly learn Forex trading utilizing studying Forex exchange courses before implementing their Forex trading strategy.


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#2
radex78

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For newbie learn basic forex is important so will get at least understanding about forex business, because sometime any new trader interested to learn forex because tempted by promising income which they look their friend can making good money from forex, and sometimew they jump to register account on broker while still don't understand step to start trading
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#3
tauf

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Discover everything you need to know about trading and analysing the world's markets by watching our 10-part Forex trading video series.


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#4
Josesv

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Having a clear understanding of the forex market is simple, how hard it is to know how to invest in currency since this learning process is very long and can be difficult if you do not have a good mentor or school. The explanation given at the beginning of this forum thread is very good.

 

Winning trade setups in foreign exchange trading has much to do with the ability to pick important fundamental, technical and sentiment data for analysis. Hindsight, foresight and insight are required to interpret a set of given data in order to be able to identify reoccurring patterns that can be profitable trade setups. This has to do with the trader’s ability to identify currency pairs known to show certain characteristics in the market given the same conditions. The trading strategy we are looking into works on the basic knowledge that the following currencies are the majors; USD, GBP, EUR, CHF, JPY and commodity currencies are CAD, AUD and NZD.
 

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#5
watsonjohn759

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Thanks


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#6
anna.semera

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The basic of forex trading is how to avoid big loss in forex. You can place an order and save it until close that order, it was great for a newbie.


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