Basics of Forex Currency Trading for Beginners
Index 1.
Basics Of Currency Trading
2.
How Forex Works
3.
Why Trade Currencies
4.
Why Currency Trading Is Not For Everyone
Basics of Currency Trading ď‚— The term currency trading can mean different things. ď‚— We discuss currency trading as buying and selling currency
on the foreign exchange market with the intent to make money, often called "speculative forex trading".
How Forex Works ď‚— The currency exchange rate is the rate at which one currency
can be exchanged for the another. ď‚— It is always quoted in pairs like the EUR/USD (the Euro and
the US Dollar).
ď‚— Exchange rates fluctuate based on the economic factors like
industrial production, inflation and geopolitical events. ď‚— These factors will influence whether you buy or sell a
currency pair.
For Example ď‚— The EUR/USD rate denotes the number of US Dollars one
Euro can purchase. ď‚— If you believe that the Euro will increase in the value against
the US Dollar, you will buy Euros with the US Dollars.
ď‚— If the exchange rate rises, you will sell the Euros back,
earning a profit. ď‚— Always keep in mind that the forex trading involves a high
risk of loss.
Why Trade Currencies? ď‚— Forex is the world's largest market, with about the 3.2
trillion US dollars in daily volume and 24-hour market action. ď‚— Some key differences between the Forex and Equities
markets are: 1. Many firms don't charge commissions you pay only the bid/ask spreads.
2. There's 24-hour trading – you direct when to trade and how to trade. 3. You can trade on leverage, but this can magnify potential gains and losses. 4. You can focus on picking from the few currencies rather than from 5000 stocks. 5. Forex is accessible – you don’t need a lot of money to get started.
Why Currency Trading Is Not For Everyone ď‚— Trading foreign exchange on margin carries the high level of
risk, and may not be suitable for everyone. ď‚— Before deciding to trade foreign exchange, you should
carefully consider your investment objectives, level of experience, and risk appetite.
ď‚— Remember, you could sustain a loss of some or all of your
initial investment, which means that you should not invest the money that you cannot afford to lose. ď‚— If you have any doubts, it is advisable to seek advice from an
independent financial advisor.
Thank You