FOREX TRADING
The beginnersguide to invest in market, using financial leverage, master money management and get financial freedom
TABLE OF CONTENTS
CONCLUSION ..................................................................................................................................... 101
PART ONE
INTRODUCTION TO FOREX TRADING
CHAPTER ONE
INTRODUCTION
The Forex market was created when floating exchange rates began to materialize in 19 71. The Forex market is not cen-tralized, as in futures on currencies or stock markets. The exchanges are done on computers and phones in thousands of countries.
The forex market, often called FOREX, is where banks, investors, and speculators trade one currency for another. Stronger foreign exchange activity maintains the spot exchange between five major currencies: the US dollar, the British pound, the Japanese yen, the Eurodollar, and the Swiss franc. Foreign exchange is also the largest financial market in the world. In comparison, the US stock market can trade $ 10 billion in one day, while the foreign exchange market is trading up to $ 2 trillion in one day. The Foreign exchange market is a 24-hour open market, where the currency market is the 24-hour interbank market. This market follows the sun all over the world, passing from the main banking centers of the United States to Australia and from New Zealand to the Far East, then to Europe and finally to the United States.
Until now, the professional operators of the main commercial and international investment banks dominated the foreign exchange market. Private speculators, large multinational corporations, global money managers, authorized resellers, international money brokers, and futures and options traders are examples of other market participants.
There are three main reasons for participating in the foreign exchange market. One is to facilitate a real transaction whereby international companies convert profits earned in foreign currency into their national currency. Corporate treasurers and fund managers also enter the foreign exchange market to guard against undesirable exposure to future price movements in the foreign exchange market. The third and most popular reason is profit speculation. It is now reported that less than 5 /o of all foreign exchange transactions facilitate a real business transaction.
The foreign exchange market is considered an over-thecounter or "interbank" market because transactions are made between two counterparties by telephone or via an electronic because transactions are made between two counterparties by telephone or via an electronic hour market, Forex trading starts every day in Sydney and travels around the world as the business day commences in every financial center in Tokyo, New York, and London. Unlike any other financial market, investors respond to currency fluctuations caused by economic, social, and political events, as they occur day and night.
WHAT IS FOREX TRADING?
Forex trading involves transactions in international currencies. Here, you can sell the currency of one country to buy the currency of another. The trader negotiates [Forex] at the most appropriate time to profit from the transaction. Good forecasting techniques are very important here. One can imagine how much Forex trading can be a lucrative opportunity since trading fluctuations are very small.
But remember, when volumes are large, a small change can be very helpful. There are also many non-monetary benefits. Anyone who wants to trade Forex can do it because only basic knowledge is needed for this purpose.
Forex can help you make a lot of money. But there are some conditions to follow before trading Forex. First, you must have a thorough knowledge of stock market trends, fundamental trading principles, and the ability to take risks. You will have all the help you need to reach these conditions very easily.
Many websites on the Internet can help you clarify your basics and cope with bad weather. A good reason to consider Forex trading is the fact that there are frequent currency fluctuations, although in percentage it may be small.
You win if the flotation favors you and the reverse is also true. Nobody can accurately predict the evolution of currencies. Liquidity is another reason why Foreign exchange trading is so popular.
Now, the most important part - on the Forex, you can earn large sums of money, even if your initial investment is lower. You can only invest $ 50,000. Rich people have no upper limit on the value of the investment. So, ensure to remember that even with a nominal investment, the ability to win is undoubtedly very big.
Most large companies are now connected to the world of the Internet, and forex trading is no exception. You can carry out foreign currency transactions directly from your home. Everything is accomplished online. You have the freedom to choose when you want to negotiate, and you must respect no delay.
You can be your boss. The online trading process is easy enough for anyone to understand. You need to open an account for trading Forex with a recognized broker, and they will do the rest of the formalities. The only thing required to do is to prepare for the value of your investment.
Thus, Forex trading can be one of the best companies to make money. There is certainly a level of risk, but it can be avoided with the necessary caution and with an alert mind!
Importance of Forex Trading
Foreign Exchange [Forex] involves the exchange of different currencies for a profit. The reason to buy the currency of another country may be the need to buy some goods from that country and make money through the exchange rate difference. In the latter case, people buy money from a foreign country when the market rate is low, and they sell when the rates go up. Currency trading is usually between central banks, governments, speculators, and multinationals. It is impossible for nations to trade with each other in the absence of a foreign market.
A huge amount of money is traded daily in the Forex market, although the amount invested by an individual trader can be very low. Nobody individually can have any influence on Forex fluctuations, not even within the government. Thus, it can easily be concluded that the level of the currency reflects the strength or weakness of a country's economy. This makes the foreign exchange market a good place for competition.
The government and the central bank are trying to stabilize the currency of their country by speculating, buying, and selling currencies on time. For example, they can influence the market if they trade large volumes. However, to buy their currency, the government or the central bank must have huge foreign exchange reserves. It is, therefore, practically impossible to artificially inflate the value of the currency.
Banks trade a lot in foreign currency, and that's part of the volume in the Forex market. They buy parts not only individually, but also on behalf of their customers. They trade a lot of futures contracts. Until a few years ago, brokers could influence trading volumes in the Forex market. But because of the electronic services currently available, broker services are not required. It is easy to operate electronically.
Negotiating with international countries is only possible with the existence of Foreign exchange markets. When there is no Foreign exchange market, there is no common currency between the two countries, so you cannot evaluate the value of one currency over another. The buyer pays the seller in the old currency. With the money received, the seller buys goods in the country of the buyer and sells them in his country [the seller].
Only then can he know how much he has earned through exporting. However, in the presence of a Forex market, it is very easy for a seller to know his income as soon as he carries out an export operation. Similarly, the buyer will also have a thorough understanding of the costs he will incur to purchase goods from an international country.
