Forex Trading - By: Bernie Ebner

Forex Trading by Bernie Ebner

Trading on the stock markets of the world is an age-old tradition. There is an enormous variety of choices that are available to the investor virtually around the clock every weekday when the markets are open around the world. This fact allows any person in any financial situation to invest in the market or commodity of their choosing as they see fit. That is why the global trading exchanges are seen as “the great equalizer” in financial transactions.

The challenges that face a potential investor are equally diverse. Every stock, bond, asset fund, commodity, and currency has its own unique set of trends that require the investor to study and monitor their investments to avoid excessive losses and to ensure sufficient gains. Some investments, such as government bonds and preferred stock shares, generally have little movement in the markets and are considered a less risky investment option.

Other trading options are much more volatile and therefore require more wisdom and scrutiny. The enticement is a potential for higher gains, yet the potential for higher losses exists as well. Currency trading is in this category, due to the volatility of exchange rates that fluctuate rapidly every trading day. The market for international currency trading is referred to as foreign exchange, or Forex.

Forex trading is a unique and highly volatile method of investing. It is based on the differences in the value of national currencies and how they compare to each other. Due to the constant fluctuation in currencies around the world, the chance of realizing gains by estimating the daily trends of those currencies is one that is quite attractive to many investors.

Forex trading is unique in that there is no central market entity involved, such as NYSE or NASDAQ. The “market place” is the inter-bank activity that deals with the rate of exchange between currencies, known as a “cross” value. Generally, the currency of the largest economies - the US, Great Britain, Asia, and Europe - is the focus of Forex trading. The investor will be involved in direct transactions with other individual traders or entities based on the value of two currencies per transaction, such as the US dollar versus the Euro.

Although currencies often stay within an estimable range, the minute fluctuations in the value of those currencies are the focus of Forex trading. A trade consists of the difference between buying currency (known as the “ask”) and selling it (known as the “bid”). This difference is called the “spread”, and it is this spread that constitutes the possibility for gain or loss.

The minute fluctuations in currencies, known in Forex trading as “pips’, can be monitored by the trader on an hourly basis, so that they may realize the best times to buy or sell. This requires intensive study and understanding of rates of exchange and value trends if an investor wishes to maximize gains and minimize losses.

There are several other factors that are to be considered in Forex trading, such as interest rates, leverage ratios, margin trading, and appreciation/depreciation trends of the currencies themselves.



Bernie´s FOREX Bible - Day Trading Strategies - Swing-trading strategies - Learn to Trade Forex. For details visit http://www.successful-forextrading.com

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