Beginners Guide To Forex Trading
With Christmas on its way and the UK economy uncertain whether it will have to suffer a double dip recession more and more people are looking for different ways of generating income. Some people may take on a second job, some may choose to gamble in order to make a quick profit and some people may look at trading on the foreign exchange market in order to raise some extra cash.
Forex trading is a great way of generating extra revenue but like gambling, there is a lot of risk involved if you don’t do your research properly. Forex which is made up of the words foreign and exchange is a trading market where different currencies are traded against each other.
Unlike the stock market which is broken up into various stock exchanges such as the NASDAQ and London Stock Exchange, the forex market operates within itself and generates up to 3 trillion dollars a day making it the largest trading platform in the world.
As with stock market trading, forex trading requires you to go through a stockbroker or market maker as they are sometimes referred to in order to carry out your trades and give you trading tips. A total of 20 currencies are traded on the market and in order to trade you must buy one form of currency and sell it off at a later stage when that particular currency is stronger than when you first bought it.
So say you bought 1000 dollars for approximately 600 pounds six months ago and you now wanted to sell your 1000 dollars. If market conditions have increased the value of the pound and it is strong against the dollar then you would want to sell your dollars for pounds again and make a small profit.
So for example if you happened to sell your 1000 dollars six months on then you could hypothetically receive about 650-700 pounds in return. This is an example of how forex trading works but generally more money is traded than that in order to make larger returns.
The above example would have to be completed by your broker or market maker in order to make the transactions happen but this can all be done through the internet meaning you don’t have to actually go and talk with your broker face to face. In order to know when the best time to sell a particular currency, you will have to monitor the forex market in real time from your computer, there are a range of charting applications available which will monitor the market and notify you of any potentially profitable situations that may arise.
If you want to start trading the best way to go about it is to download trading applications that offer free trials which in turn will allow you to trade with virtual money so that you don’t have to risk any of your own money. Then once you’re happy you know what you’re doing you can sign up for an account and start making real money.
Learn about Traders University with Knowledge to Action-learn more on their site www.knowledgetoaction.co.uk, via Greg Secker and Knowledge to Action on Twitter or on one of Greg Secker’s specialist blogs.