Forex stands for foreign exchange which is the trading of different world currencies. Forex trading can be compared to any other market where buying and selling occurs simultaneously but the only difference is that in the forex world one buys another currency as they sell another. There are no goods or services. Today anyone can engage in this trade but they should know that as much as there are rewards that come with it, they should know that a risk is also involved. How does one begin trading in the forex market? One will not do that personally but they will have to get the services of a broker. The broker you choose determines your success or failure in this market therefore you should choose someone who is recognized by the body in charge of the forex trading. Let the broker show you testimonies of their work before you get into an agreement. This might be a bit expensive but remember a forex trader is a risk taker and you use money to make more of it.
What is Currency Trading?
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How Forex Works
The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.
Source : http://www.xe.com/currencytrading/
Do not go into trading without information because knowledge is power. This simply means that one should watch the news and read financial journals as this will assist them in making a decision to know when to buy or sell. Experts advise that one also studies candle charts and not to use general common sense. Practice does make one better if not perfect and the same goes for the forex market. It is advised that before one starts trading they should open a demo account which will give them a glimpse of what they are about to get into. In this account the new trader will be using paper money as they learn what goes on in the real market but when they are sure enough then they can open a live account and start using their own money as capital and trade with it.
Online media outlets and propaganda-based information are luring ‘fresh meat’ into the trading industry. Of course, YOU are the ‘fresh meat’ but they don’t want you to know that. Basically, the Forex industry wants you to trade without an education, without knowing what you’re doing, because they know that’s the fastest way they will get your money. We’ve all heard about the ‘churn and burn’ of most Forex traders.
Don’t get me wrong, that’s not to say you can’t be successful in trading and do well, but following the ‘herd’, which is what the industry wants you to do, is certainly not going to do you any favours.
When a new trader starts operating a live account they will have to learn how to be calm in all situations whether they gain a loss or profit. All that is part of trading in this market thus the major role of psychology. Many traders have found it hard to transit from what they were practicing to reality thus lots of disappointments. Trading psychology has been known to influence the judgment of many traders who were either fearful to take a risk that could have given them handsome profits while others were too greedy thus trading in greater risks and encountering larger losses.
Because forex (FX) is a decentralized market in which dealers disseminate their own price feeds through proprietary trading platforms, it is crucial to learn the features and idiosyncrasies of each type of trading software before committing real funds to an account. Fortunately, in retail, FX traders can test out each platform using demo dollars. Every reputable dealer in FX allows potential customers to download a free demo version of its software. This is critical if the customer is to become acquainted with the platform's layout and the means of order entry. Here we'll discuss the importance of demo trading and let you know what you should look out for when trying different platforms.
sourced from: http://www.investopedia.com/articles/forex/05/demotrade.asp