backcomb lightly: How To Trade Foreign Currency

How To Trade Foreign Currency

Unless you are new to trading you probably know already that technical analysis is a method of forecasting future price movement of commodities, securities, etc (in this case currencies) based on chart analysis, pattern formations, technical indicators, etc. Forex can be traded technically and in my opinion it is quiet predictable.

There is no fixed centre for the trade so all the trade is done over telephone, internet and fax. The foreign exchange trade witnessed a massive boom only after online forex trading systems were introduced, internet and telephone has helped the trade grow from $70 billion a day in the 80s to around $1.5 trillion to $2 trillion today.

Forex (foreign exchange) trading, which is buying one currency while concurrently selling another, is getting a considerable amount of press as an attractive alternative to trading on the stock exchange. Among the reasons of Forex trading becoming a popular alternative is that Forex provides a 24-hour market, lower transaction fees, and no one entity can corner the market because of its sheer vastness. The drawback is that it is not easy to learn Forex trading on your own. While it can be done, the lessons can be relatively expensive.

A Forex mentor will help you learn the ropes of Forex currency trading. With so many people out there offering the same service with different methods of delivery, how do you determine which method of learning is best for you? With all the e-courses, videos, books, and seminars that are easily available online and offline for a price, it is difficult for you as the consumer to guess which one will be the one that clicks for you. You have to examine several options before purchasing one that works and some people go through several methods and never find one that actually helps them learn Forex trading. While this is not rocket science, it can be quite confusing and a little knowledge can be more dangerous and expensive than a true education.

My purpose for writing this article is to demonstrate to you the advantages of trading on the FOREX market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote ?If It Doesn?t Go Up, Don?t Buy It?. He said ?Everyone who invests is a trader, only the time period is different.? It is a lesson that I took seriously after taking a beating in the stock market in 2000.

Trading costs ? Transaction costs in the FOREX market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up. Minimum investment ? You can open a FOREX trading account for as little as $300.00. It took $5,000 for me to open my futures trading account. Focus ? 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely. Trade execution ? In the FOREX market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent. While all of these features make trading the FOREX market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

Focus ? 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

This system works, it?s called card counting and others have used it to win in blackjack also. By placing minimum bets on almost all the hands played they controlled their losses. When the cards left in the deck were in their favor they would place large bets and win most of the hands. During this streak of winning they would make up their losses and turn a profit. When a new stack of cards is brought out to the table they would leave and cash out because with the introduction of a new stack of cards the odds swing back in favor of the house.

If you are interested in learning more about foreign currency consider visiting the author?s main page. Their is so much there learn about the various coin values around the world.