Forex Trading
Although forex is the largest financial market in the world, it is relatively unfamiliar terrain to retail traders.
Until the popularization of internet trading a few years ago, FX was primarily the domain of large financial institutions, multinational corporations and secretive hedge funds.
But times have changed, and individual investors are hungry for information on this fascinating market.
This market differ from other markets, because all members trade with each other based upon credit agreements, currency trading does not take place on a regulated exchange.
This market is not controlled by any central governing body, but it is the most liquid and fluid market in the world.
Currency trading is buying and selling currency on the Forex market with the intent to make money, this is purely a speculative market.
About 70% to 90% of the foreign exchange transactions are speculative. People who bought or sold the currency has no plan to actually take delivery of the currency in the end.
Please keep in mind that forex trading involves a high risk of loss, you should not invest money that you cannot afford to lose.
More informations here : http://www.investopedia.com/articles/forex/06/SevenFXFAQs.asp
and here : http://www.xe.com/currencytrading/
The currency exchange rate is the rate at which one currency can be exchanged for another and is always quoted in pairs like the EUR/USD (the Euro and the US Dollar).
The EUR/USD rate represents the number of US Dollars one Euro can purchase.
If you believe that the Euro will increase in value against the US Dollar, you will buy Euros with US Dollars. If the exchange rate rises, you will sell the Euros back, making a profit.
To profit from the fascinating world of international trade, you must understand the key factors that affect a currency's value.
In order of importance, they are five key factors you must analyze.
- Interest Rates
- Economic Growth
- Geo-Politics
- Trade and Capital Flows
- Merger and Acquisition Activity
People who can predict how each of these factors affect currency trades have the foundation to make serious returns but the foreign exchange market is a zero sum game in which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading.
An inexperienced retail trader will have a significant information disadvantage compared to these traders.
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