This article will look at the foreign exchange currency trading basics. Forex is an abbreviation of Foreign Exchange and foreign exchange currency trading is the act of trading currencies on the forex market. As there is no physical market for forex, akin to the stock exchange, the forex market only exists when a currency is traded trough the banks Interbank market.
The forex market dwarfs all other markets in size. It’s larger and has more volume than all other financial markets put together. That’s saying something in the world of finance. It’s 50 times bigger than the equity market and 15 times larger than the bond market. The daily turnover on the forex market reaches almost 2 Trillion Dollars. With this much currency changing hands, the forex market is the closest thing to a ‘perfect’ market there is. This makes it a very attractive market to trade on for individual traders as the playing field is even. Big banks do not have an inherent advantage over the small trader.
Foreign exchange currency trading is popular because of it’s size and opportunity for quick profits, but the number on attraction for many traders is the possibility of leveraging trades over 100 times. Leveraging is trading with borrowed money with an initial deposit. This means that a $1000 deposit will allow you to trade for over $100,000. You won’t get much for $1000 on the stock exchange, but on the forex market your $1000 goes a long way if you use leverage.
Foreign exchange currency trading is a very popular and exiting way to make some extra money, trading from your home. Many traders are not formally educated in forex trading, but still make a nice additional income and some go on to become full time professional traders. Though forex trading is easy and exiting, you should never trade for money that you can’t afford to lose or trade if you can’t handle losses. There will be losses in forex trading, there’s no way to avoid that even for top traders.
Forex trading is a very exiting way to make money from home, it’s easy and simple to pick up, but you should never trade for more than you have budgeted or trade with money that you can not afford to lose. There will be winning sessions and there will be losing sessions and it’s very important to be able to handle both.
Another great thing about the forex market is that it’s open 24/7 and never closes. That means you have the freedom to trade whenever you like and won’t have to plan your day around your trades.
All forex brokers offer demo accounts for new clients. A demo account will allow you to trade with ‘play money’ but on real prices. This is recommended to learn the basics of trading before you try your hand with real money. When you are ready to trade with your own money, consider opening a mini account where you can trade for as little as $100.