Introduction to Forex

Do you know Forex? If the answer is 'No' then you should go through this article to get a brief idea about Forex. Forex trading can help you to earn lot of money. “Forex” is the short form of Forex Exchange. Sometimes, it is also referred as “Spot FX” market; it has become a full time job for many people. Forex market is considered one of the biggest markets in the whole world.If you are a Forex trader, you will buy and sell world currencies, thus earning profit from the difference, between the exchange rates. Forex trading can definitely yield high profits. Anyone can do Forex trading via Forex brokers. Forex market mainly consists of currency traders that speculate on fluctuations in exchange rates. Currency traders take advantage of even the slightest fluctuation in exchange rates.Currencies are always traded with one another. Each and every pair of currencies constitute a product and is noted XXX/YYY. Here YYY is a currency that is always expressed in XXX currency. In addition, XXX and YYY are 3-letter international codes of the respective currencies. For instance, EUR/USD means euro expressed in US dollar, as 1 Euro= 1.2045 dollar. Exchange rate fluctuations are caused by monetary flows and anticipations on global economic conditions. This market operates 24 hrs a day and 7 days a week between the brokers with banks, individuals with Forex brokers. Advantages of Forex:Investing in Forex market is a better option than other kinds of investments. Unlike regular stock markets, Forex is open 24 hours a day. To do Forex trading, you do not need large amount of capital. With a small amount of $300 USD, you can enter the Forex market and open a “mini account” which will allow you trade lot of units.Forex market has high liquidity. In Forex trading, you have complete control over your capital. Most investments hold your money for a long time. This is a major disadvantage because you cannot use this money in case of financial difficulty. If somehow you access this capital, you will have to suffer huge loss, which is not feasible. Forex traders can earn profit even in unfavorable market conditions. Stock market traders cannot get profit unless the stock prices increase. Forex traders can make profit during down trends and uptrends.Risks in Forex trading:Forex trading can be risky but if you possess self-discipline and good management skills then Forex trading can relatively be a low risk investment. Trading in Forex market can be done anytime, anywhere if you have access to a computer. Before you start trading currencies, you are advised to practice with “fake money” or “paper money”. Most Forex brokers have their own demo accounts from where you can easily download their trading stations and then practice real time trading with paper money. By doing this, you will be better prepared to trade with your hard earned money.
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