Introduction of foreign currency exchange (Forex) market
A quick overview on the foreign exchange market - if you are not sure what's Forex Market, here's where you should start your reading.
Reading and undestanding Forex quotes
Currencies are traded in pairs in Forex market. Learn and get used to Forex trading quotes as well as keyterms in this chapter.
Trading Forex with margins
I bet you didn't know your $1000 has $100,000 buying power when it comes to Forex margin trading. Learn how you can maximize your ROI in Forex trading with leveraging broker's margin.
Advantages in Forex trading
Why Forex? Why not stocks, commodities, or even properties? Learn what are the good things about Forex trading.
Major currencies traded in Forex market
Do we trade RMB in Forex market? How about SGD? Ever wonder what are the major currencies trade in FX market? Here's a good place to get the info.
Fundamental analysis in Forex trading
In every trading business there're the fundamentalist and the techies! Check out how fundamental Forex traders analyze a currency value.
Economy Indicators
What's the use of economy indicators? What economy indicators are used in Forex tradings?
Technical analysis in Forex trading
As said, there's fundamentalist and there're techies who trade based on technical analysis! Check out how technical Forex traders analyze the trend of a currency value.
Getting started in Forex trading
Ready to get started? Here's the simple procedure to get you started!
Risks management in Forex
We do not want you to get the wrong idea that there's easy money to be made in Forex market. Yes, there're risks in Forex trading. Learn what are the risks and how you can avoid them.
Forex frequent asked questions
Get related FAQ answered here.
Forex glosarry
A mini dictionary for your Forex learning
mardi 1 décembre 2009
Forex Beginner's FAQ Answered
Q: What is Forex trading?
Forex, Foreign Exchange Market, is an international exchange market where currencies from all around the world are traded. It involves buying and selling different currencies of the world.
Forex market is the largest trade market in the world, yielding $1.9 trillion daily. It is traded all around the world but United States, Japan, United Kindom, and Europes have the most active Forex traders.
Q: How Forex trading works?
Forex is often traded in pairs, for example USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. You get 'short' in one currency and you will get 'long' in the other one. Unlike conventional stocks market, Forex trading does not have a centralized trade market.
It is considered as Over-the-Counter or Inter-bank as trades are done between two counterparts via electronic network or telephone connections. Forex works truly as a 24-hour market.
Everyday Forex trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.
Q: How high are the risk in Forex trading?
The risks of losing money in Forex trading is high, but it is controllable via proper education and trading system. Trading system is a must in Forex trading. Charts, graphs, or pivot points are handful to indicate the right time to enter or exit the market. An 'automated system', such as make your easierAs in any trade market, discipline, control of emotion, and money management are the traits needed to be succeed in Forex trading.
Rewards in Forex trading can be very lucrative if traders manage their risk nicely. One benefit to using our recommended brokerage firm is that they guarantee fills at your Limit and Stop-Loss order prices with no slippage.
This means you can have total control over the amount you risk on each trade. But remember, FOREX Trading is speculative and any capital used should be risk capital. In fact, we recommend that you trade on a demo account until you have shown profit for at least three consecutive months before trading real money.
Q: Forex vs traditonal stocks/mutual funds trading: How does they match up?
Forex and conventional stocks are different type of trading. When trading Forex, most trader's objectives are to predict short term movement in the currency exchange values. Most Forex tradings are done in day-trading style where traders will buy and sell in the same day. Different from Forex, stocks and mutual funds trading are more to long term style where trades may last for years or even decades!
Q: What are the major traded currencies?
Major traded currencies are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.
Q: Who are the major players in Forex trading?
According to Wall Street Journal Europe, 73% of the trade volume is covered by Deutsche Bank, who covered 17% of the total currency trades; followed by UBS, Citi Group, HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley.
Q: What tools do i need to start trading Forex?
It does not need a lot to start trading Forex: a funded Forex account and a computer with Internet connections are basically sufficient for you to start trading foreign currencies. However, proper Forex education and systematic trading tools are highly recommended to minimize your risks in Forex market.
Also, beginner traders are advised to start off their trading in Forex with a demo account first. A demo account is an account set up with 'play' money for the purpose of training and shapen your trading skills. It's free to open a demo account with most of the Forex online broker and it does not risk your real money in the trades.
Q: Who do you recommend to learn Forex from?
For beginners, our lessons can be a good place to start off.
Forex, Foreign Exchange Market, is an international exchange market where currencies from all around the world are traded. It involves buying and selling different currencies of the world.
Forex market is the largest trade market in the world, yielding $1.9 trillion daily. It is traded all around the world but United States, Japan, United Kindom, and Europes have the most active Forex traders.
Q: How Forex trading works?
Forex is often traded in pairs, for example USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. You get 'short' in one currency and you will get 'long' in the other one. Unlike conventional stocks market, Forex trading does not have a centralized trade market.
It is considered as Over-the-Counter or Inter-bank as trades are done between two counterparts via electronic network or telephone connections. Forex works truly as a 24-hour market.
Everyday Forex trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.
Q: How high are the risk in Forex trading?
The risks of losing money in Forex trading is high, but it is controllable via proper education and trading system. Trading system is a must in Forex trading. Charts, graphs, or pivot points are handful to indicate the right time to enter or exit the market. An 'automated system', such as make your easierAs in any trade market, discipline, control of emotion, and money management are the traits needed to be succeed in Forex trading.
Rewards in Forex trading can be very lucrative if traders manage their risk nicely. One benefit to using our recommended brokerage firm is that they guarantee fills at your Limit and Stop-Loss order prices with no slippage.
This means you can have total control over the amount you risk on each trade. But remember, FOREX Trading is speculative and any capital used should be risk capital. In fact, we recommend that you trade on a demo account until you have shown profit for at least three consecutive months before trading real money.
Q: Forex vs traditonal stocks/mutual funds trading: How does they match up?
Forex and conventional stocks are different type of trading. When trading Forex, most trader's objectives are to predict short term movement in the currency exchange values. Most Forex tradings are done in day-trading style where traders will buy and sell in the same day. Different from Forex, stocks and mutual funds trading are more to long term style where trades may last for years or even decades!
Q: What are the major traded currencies?
Major traded currencies are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.
Q: Who are the major players in Forex trading?
According to Wall Street Journal Europe, 73% of the trade volume is covered by Deutsche Bank, who covered 17% of the total currency trades; followed by UBS, Citi Group, HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley.
Q: What tools do i need to start trading Forex?
It does not need a lot to start trading Forex: a funded Forex account and a computer with Internet connections are basically sufficient for you to start trading foreign currencies. However, proper Forex education and systematic trading tools are highly recommended to minimize your risks in Forex market.
Also, beginner traders are advised to start off their trading in Forex with a demo account first. A demo account is an account set up with 'play' money for the purpose of training and shapen your trading skills. It's free to open a demo account with most of the Forex online broker and it does not risk your real money in the trades.
Q: Who do you recommend to learn Forex from?
For beginners, our lessons can be a good place to start off.
FX Glossary
Reading articles and news regarding Forex are sometimes confusing due to the specific terms/jargon used by the regular traders. Find Forex keyterms meanings here and stop scracthing your head now!
Managing Risks in Forex Trading
There are risks in all sort of trading. As we said in the very first chapter - there are, in fact, many Forex traders lost their money in FX market. While other online brokers always try to sounds optimistic, we do not want you to get the wrong idea that there's easy money to be made in Forex market.
It is common that one afraid of being involved in Forex market because of high risk in this trading field. Although every capital market involves certain level of risk, the risk of loss in foreign currency trading market can be extensive.
It would be wise to learn about the potential risk (and managing it) if you wish to trade in Forex market. Here's how you can manage your risks in Forex trading to the minimum value.
It is common that one afraid of being involved in Forex market because of high risk in this trading field. Although every capital market involves certain level of risk, the risk of loss in foreign currency trading market can be extensive.
It would be wise to learn about the potential risk (and managing it) if you wish to trade in Forex market. Here's how you can manage your risks in Forex trading to the minimum value.
Forex overview
What is Forex? Forex is an abbreviation of Foreign Exchange (also referred to as FX) and it is the largest financial market in the world.
The Forex market is the place where currencies are traded (currencies are money that is used as an exchange medium). In other words, it is the place where currencies are being sold and bought. In the Forex market all currencies are traded in real time.
Trading with currencies always means that there are two simultaneous transactions taking place. If a currency is being bought, it is also being sold. To better understand this notion, think of currencies as both the goods you are buying AND the method with which you're paying for the goods.
Since the Forex market is the place where currencies are traded in real time, people may trade one currency for another and make a profit off of this transaction. Profits are made when one is able to determine which currency's value will increase by the end of a pre-determined time period (such time periods may be short or long). The Forex market is open 24 hours a day, five days a week and it is based in four major cities: New York, London, Sydney, and Tokyo. The Forex market is open to individuals over the age of eighteen.
While Forex trading may sound daunting, it really isn’t. It can be easily comprehended and understood without prior experience in finance or economy. It is challenging and exciting, thought provoking and manageable, stimulating and filled with opportunities.
Some Forex Basics:
- The first currency listed in a currency pair is called the "base currency".
- The “base currency” is usually the U.S. Dollar. Traders will generally trade the U.S. Dollar against another currency, which is called the “counter currency”.
- Currencies are quoted in pairs. For example: The pair U.S. Dollar and JPY will be quoted in the following way: USD/JPY equals to 2.5 (This means that 1 U.S. Dollar can buy 2.5 JPY).
- When a quote increases, it means that the “base currency” has risen in value and the “counter currency” has weakened in value. For example: If the USD/JPY quote used to be equal to 2.5 but is now equal to 2.6, then this means that the dollar has strengthened (because 1 U.S. Dollar can now buy 2.6 JPY as opposed to the mere 2.5 JPY it could buy beforehand.)
Now that you know a thing or two about the Foreign Exchange market, we invite you to explore eToro—the Revolutionary Forex Trading Platform. You too can make your mark in the Foreign Exchange market. Use eToro as your gateway to the ever-growing world of Forex trading.
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