Forex trading, like any other trade in the financial market, involves a high level of risk. The world of Foreign Exchange should not be entered by anyone who has not fully oriented himself with the what's, where's, how's, and why's of the business.
It works this way: X/Y rate is the currency pair. This stands for the number of X one Y can purchase. If A value increases against B, buy A with B. If the exchange rate goes up, you sell X back and cash in your profit.
The right guidance will lead you to making better decisions in this type of trade. You should seriously consider the following aspects before you engage in the Foreign Exchange Market: your investment objectives, your risk appetite, and your level of experience. Beginners should always consult an independent financial counselor to get a better scope of these three.
What gives Forex an edge over other investment markets are the following:
1. It happens on a truly global scale, and there is incessant trade for as long as the market is open in any of the major centers. It takes place on Sunday night in Australia and ends on Friday in New York.
2. There is small price change within a highly liquid market in Forex. In other words, the currencies can be converted quickly with no price discount.
3. There is leverage in trading as allowed by Forex brokers. You can trade for more than what your account has. A 60:1 leverage is possible for example, wherein every $60 can be traded with each $1 that your account has. Even if you have a capital of only 1000, you can trade for 60000.
4. There are no limits for directional trading in the foreign exchange market. For instance, if you believe that a currency pair will be more valuable you can purchase it, and if you think it will become less valuable you can sell it.
It works this way: X/Y rate is the currency pair. This stands for the number of X one Y can purchase. If A value increases against B, buy A with B. If the exchange rate goes up, you sell X back and cash in your profit.
The right guidance will lead you to making better decisions in this type of trade. You should seriously consider the following aspects before you engage in the Foreign Exchange Market: your investment objectives, your risk appetite, and your level of experience. Beginners should always consult an independent financial counselor to get a better scope of these three.
What gives Forex an edge over other investment markets are the following:
1. It happens on a truly global scale, and there is incessant trade for as long as the market is open in any of the major centers. It takes place on Sunday night in Australia and ends on Friday in New York.
2. There is small price change within a highly liquid market in Forex. In other words, the currencies can be converted quickly with no price discount.
3. There is leverage in trading as allowed by Forex brokers. You can trade for more than what your account has. A 60:1 leverage is possible for example, wherein every $60 can be traded with each $1 that your account has. Even if you have a capital of only 1000, you can trade for 60000.
4. There are no limits for directional trading in the foreign exchange market. For instance, if you believe that a currency pair will be more valuable you can purchase it, and if you think it will become less valuable you can sell it.
