Foreign Exchange Trading

Written by ForexCult Team
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Foreign Exchange Trading If you are new to foreign exchange trading, it is very important that you take the time to learn a couple of things that will help you to succeed in the forex market. Some of the basic things that you are going to need to learn is the ability to understand the actual logic that is in place behind foreign exchange trading, you are also going to want to take the time to recognize the trends that are present in the market as well as the ability to develop what is known as a forex trading plan. As a forex trader you are going to need to take the time to utilize the tools that you are able to use so that you are able to manage the risk and you are going to need to know how to react to the actual economic events that take place that are major and that impact the global currencies as well. If you are interested in being the best that you can be at foreign exchange trading, you are going to need to make sure that you do take the time to accomplish these five things. In this article, you are going to learn the basics of foreign exchange trading which will prepare you for your introduction into the market. Learning the Basics of Foreign Exchange Trading When it comes to the introduction into the foreign exchange market it is important that you know that this market is also referred to as a couple of different names as well such as the Forex market and the FX market. It is also important that you know that the foreign exchange market is actually the largest market that relates to finances in the whole entire world and because of this the market is able to have an average daily turnover of around one point nine trillion dollars. You should also keep in mind that foreign exchange is used to refer to the actual simultaneous purchasing of a type of currency and the actual selling of another type of currency. Most importantly you should remember that the currencies are actually traded in groups that are referred to as pairs. For example if you were trading the Euro as well as the United States Dollar it would look like this (EUR/USD). Foreign Exchange Trading and the Reasons There are two different reasons that are currently present to purchase as well as sell currencies. When you look into foreign exchange trading you will find that there is about five percent of the actual turnover that is made daily that is present because of companies as well as governments that purchase as well as sell different products along with different services that take place in a different country than there own and then there is the reason that the countries must actually convert the profits that they have managed to make in different countries other than their own which are known as foreign countries that need to change that currency into their home currency. Both of these reasons to trade currencies are basically one in the same however the second reason for foreign exchange trading is because of the other ninety five percent of the trading that takes place is mainly for profit or what is known as speculation. Foreign Exchange Trading and Speculators When it comes to speculators, they believe that the opportunities that are present for the best foreign exchange trading is with the currencies that are known to be the most common when trading takes place. These currencies are referred to as the majors and are known to be the most liquid as well. It is known that with the trading that is taking place today, that there is more than eighty five percent of the transactions that take place that involve the majors. There are seven different currencies that are considered to be included in the majors, first you have the United States Dollar, secondly you have the Japanese Yen, thirdly you have the Euro, fourth you have the British Pound, fifth you have the Swiss Franc, sixth you have the Canadian Dollar and last but surely not least you have the Australian Dollar. The forex market is known to be a twenty four hour market that runs from five during the evening on Sunday until five in the evening on Friday. You may also want to consider the fact that the trading of forex takes place first in Sydney and then it begins to work its way around the world making sure that it meets each financial center at the start of each business day.