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All You Need to Know: Foreign Exchange Rates

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All You Need to Know About the Foreign Exchange Rates Market

Before you start trading on the foreign exchange rates market you need to know what you are getting into.  It is important that you know what the intricacies of the market are and how it differs from other financial markets.  You also have to consider the different ways that you will be able to make money on the market.

How the Foreign Exchange Rates Market is Different

Before you start trading on the forex market you have to understand how different this market is.   There are a number of points that make foreign exchange rates trading different to any other trading:

  • One of the main differences of this market is that it is open 24 hours 5 days a week.  All other financial markets are only open during business hours in the country in which  they are based.
  • The forex market is decentralised and this is what allows it to be open 24 hours. The decentralisation of the market makes it possible for anyone to trade on the market at any time.  With centralised markets you are not able to trade what they offer when the market is not open.
  • The forex market is also largely unregulated.  There are some countries that have taken steps to regulate the market.  These steps generally relate to the forex brokers that are located in the country.
  • There are no limits on the amount of currency or which currency you are trading.  It is possible for anyone to trade any currency at any time on this market.
  • Anyone can trade on the forex market as long as they have access to a forex broker.  This means that if you have an internet connection you will be able to trade.
  • One of the main benefits of trading on the forex market is that you do not have to pay broker fees.  Forex brokers do not charge a commission on a trade, but rather a spread which is part of the trade.

Will You Make Money on the Forex Market?

Most people question the ability of the average person to make money on the forex market.  A lot of people are sceptical about how well a retail trader can actually do.  There are some retail traders who make their living off trading on the forex market.  Of course, there are a lot of other traders who only make a loss on the market.

To be profitable on the market you need a strategy that you stick to and never deviate from.  Of course, the strategy has to be one that will make you a profit.  You can test your strategy on a demo account which is a simulation of the forex market.

Losing on the Forex Market

It is inevitable that you will lose some money on the market.  However, there are a number of ways that you can limit the amount you lose and how often you lose.  The inevitable loss will not be your entire trading account and may only be 1 to 2% of your trading capital.



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