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Forex Trading Basics - Part 1

By Edited Nov 13, 2013 0 0

Learn what it takes to trade in Foreign Currencies

 Forex Information Overload!

There is a lot of information on the Internet regarding all types of subjects, interests, hobbies, and so on. Some of if is good and some of it is useless. Allthough it is up to you to figure out what’s what, it is important that you do, specially in the area of finances and investments.

 

The interesting thing about any subject is that the more you know and become attracted to the subject, the more you want to know about it. You will also start getting an idea of what is good info and garbage.

 The Basics, Just the Basics

In Forex trading, the same applies. Start with the basics. This means you may want find a manual that tells you what to expect, what to do, how the system works, what to ask, and so on. This is not as simple as most people think, specially if you aren’t very good with figuring out change on the run, unless you are a bank robber, but then you don’t care. But I digress.

 

Read the footnote below for some information on a basic forex manual that you can get for free.

 Make Money Online!

If you are considering making money aside from your day job or starting a career, you can do so by trading in Forex. Surprisingly, most people don’t understand how Forex works but are still interested in trading in this financial market. It’s not just a trading market, it is the largest, the most liquid financial market in the world.

 Just a Few Currencies

There aren’t that many currencies that are used for trading, ten at the last count, and they are the US$, the Euro, Yen, Pound Sterling, Australian $, Hong Kong $, Swedish Krona, and the New Zealand $. So, you really aren’t going to have to struggle to understand the differences between them.

 A System Would Help

One thing you must do if you want to succeed is to have a system, though.

 Rumors, Innuendo, News

Much influences the value of currency, such as how the country is doing fiscallyt, how much debt it has and handles, the GDP, and so on, as well as large transactions that can take place across borders that will also influence currency values.  But the influence on currency isn’t limited to just those and this is where trading in Forex can be a lot more exciting than any other trading. For instance, a flood in an area of the world where a commodity comes from that’s unique to that part of the world will affect futures trades in other countries, coffee, sugar, cotton, are examples of this.

 Competition, Darned Competition

The other issue with this information is that there’s no one person that’s priviledged to have it and no one else (except for bankers) the information is usually available to everyone at the same time. So this makes it all the more difficult to trade confidently because the same bit of information can be used by one person for his benefit and by another for his benefit as well and you may be caught in the middle because you weren’t aware of it, specially if you were sleeping while the information was being passed around.

 A System, Really, A System!

One thing you must do if you want to succeed is to have a system, though.

 Currency Trading

Currencies are traded in pairs and are notated as XXXYYY or XXX/YYY. This is an International standard that uses countries three letter codes to indicate the country’s currency. This pairing then becomes the individual trading product. For instance, the most heavily traded pair could be the EUR/USD which means that the Euro, the currency of the European Union, is trading against the US dollar.

 Remember, A System!

One thing you must do if you want to succeed is to have a system, though. That will go a long way in getting your trades to come out profitable more often than they will be losers.


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