Forex (foreign exchange) is the largest financial market in the world, involving trillions of dollars of currency exchanges every day and operating 24 hours a day, seven days a week. Each day, computer networks all over the world connect, allowing businesses of all sizes, from large financial institutions to individual traders, to exchange various currencies with a view to making a profit. Just like in any other trade you make money when you buy low and sell high. Forex trading is simply trading currencies in the Forex market.
In the past, Forex trading was only offered to large financial institutions such as banks because of strict financial regulations. However, in the late 90s, Forex was made available to small businesses and individual traders. This is due to the advances in communications technology. High speed internet has made it possible for anyone to enter the Forex market with a view to making money at home.
Forex trading is becoming increasingly popular and could give you the opportunity to make money from home. But trading Forex is not without risk and while it is possible to make substantial profits, it is equally possible to make large losses even if you are an seasoned trader.
How to get started
A quick internet search will reveal hundreds of websites offering Forex trading education. Some of these even offer dummy trading where you can practise using pretend money. To begin with, all you need is a computer with a broadband connection, a Forex account and a trading system. These three things are enough to get you started. However, you’ll need some basic knowledge in charting before you start to trade. Forex charts a visual representation of the exchange rates of currencies and learning how they work will increase your chances of success.
Each Forex chart is different. The daily chart enables you to evaluate market trends in the past 24 hours. The hourly and 15 minute charts can be used to spot fluctuations throughout the day. Five minute charts are also available for those who really like to have their finger on the pulse.
These are the basics on how to get started trading in the Forex market. It is worth remembering that the possible earning potential is always offset by potential losses. It is wise to start off with a proper investment strategy and learn the basics before you begin. Opening a dummy account can help you practice without taking any risks.
Trading forex can be risky business. While it can bring huge rewards for traders who are able to make accurate predictions, it is also possible to quickly lose all your money in one fell swoop. Trading is a numbers game and successful traders understand this concept. They appreciate they will not make money on every singe trade and are willing to cut their losses by selling when a position they are trading begins to lose money.