Forex Trading Clarified In A Simple To Understand Manner
Forex trading is becoming increasingly popular. Chances are you have heard of it but do not understand what it is or how it works. Or perhaps you have considered trying you r hand at Forex trading but have been a bit hesitant. It is a good idea to have a basic understanding of the principles behind Forex trading before getting involved in investing this way.
This method of investing can be compared to the practice of trading baseball cards. Many of us may have done this as a child and in fact there are certainly many adults that still trade baseball cards. The chances of being successful with baseball card trading are greater than the chances of success with Forex trading.
Forex trading follows this same principle. Forex trading stands for foreign currency exchange. The way this works is just like the baseball card trading. You want to trade one currency and hold onto it till the value of this currency has increased over the value of the currency you traded with.
Like any investment there are some inherent risks. The risks however are greatly reduced with Forex trading since there is no minimum amount of money you can invest. Forex trading also offers the convenience of trading 24 hours a day during the week.
Forex trading provides a bit of excitement as you monitor the currency you are trading to see how it is fairing. You should keep in mind that you should not risk more than you can comfortable manage. Since there is no minimum you should start small and gradually increase the amount you invest as you get increasingly more comfortable with your ability and the process.
To explain this in a little more detail you imagine you want to trade dollars for Euros because you feel the value of the euro is increasing while the strength of the dollar is diminishing. You elect to trade 150 dollars for 100 Euros. Then you monitor the strength of the dollar versus the euro and when you are satisfied that the euro has strengthened in comparison to the dollar you trade back the Euros for the dollars. Only now you get'0 dollars for the 100 Euros. You have made a profit of $30 or 20%.
When this reaches a pint that you are satisfied with trade the Euros back for dollars. The increase in the value of the euro when you sell compared to the value when you purchased provides you with your profit. In the case of this example let's say the 100 euro is now equal to'0 dollars. You have witnessed a profit of 30 Euros or 20 %.
While this is just an example it is a reasonable comparison. It is not uncommon to increase your value by 10%. Just like in a poker game it is important to know when to play and when to fold. Of course this has greatly simplified the process but it provides some basic understanding to the principles of Forex trading. Naturally once you have tasted a little success you will want to trade some more but never allow yourself to get greedy. - 23223
This method of investing can be compared to the practice of trading baseball cards. Many of us may have done this as a child and in fact there are certainly many adults that still trade baseball cards. The chances of being successful with baseball card trading are greater than the chances of success with Forex trading.
Forex trading follows this same principle. Forex trading stands for foreign currency exchange. The way this works is just like the baseball card trading. You want to trade one currency and hold onto it till the value of this currency has increased over the value of the currency you traded with.
Like any investment there are some inherent risks. The risks however are greatly reduced with Forex trading since there is no minimum amount of money you can invest. Forex trading also offers the convenience of trading 24 hours a day during the week.
Forex trading provides a bit of excitement as you monitor the currency you are trading to see how it is fairing. You should keep in mind that you should not risk more than you can comfortable manage. Since there is no minimum you should start small and gradually increase the amount you invest as you get increasingly more comfortable with your ability and the process.
To explain this in a little more detail you imagine you want to trade dollars for Euros because you feel the value of the euro is increasing while the strength of the dollar is diminishing. You elect to trade 150 dollars for 100 Euros. Then you monitor the strength of the dollar versus the euro and when you are satisfied that the euro has strengthened in comparison to the dollar you trade back the Euros for the dollars. Only now you get'0 dollars for the 100 Euros. You have made a profit of $30 or 20%.
When this reaches a pint that you are satisfied with trade the Euros back for dollars. The increase in the value of the euro when you sell compared to the value when you purchased provides you with your profit. In the case of this example let's say the 100 euro is now equal to'0 dollars. You have witnessed a profit of 30 Euros or 20 %.
While this is just an example it is a reasonable comparison. It is not uncommon to increase your value by 10%. Just like in a poker game it is important to know when to play and when to fold. Of course this has greatly simplified the process but it provides some basic understanding to the principles of Forex trading. Naturally once you have tasted a little success you will want to trade some more but never allow yourself to get greedy. - 23223
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posted by X - Men @ 1:56 AM
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