Top 10 FOREX Currency Trading Basics
1. Forex currency trading is done using currency pairs, and is a very popular choice for investors for many different reasons. The pairing is made between the currency being purchased and the currency being sold.
2. Forex trading hours are different around the world. When the US market closes others across the globe open up, so no matter what time it is part of the world is trading on this market.
3. The Forex market is the largest market in the world, and the most liquid as well. This is because of the large volume of trades that are constantly occurring, and the fact that currencies can be quickly sold within seconds usually.
4. Forex currency trading only occurs online, and unlike the stock market there is no physical location associated with Forex. All of the trades are handled electronically, between a large network of computers so the trades occur in real time.
5. Automated Forex trading can be done using many different systems designed for this purpose, and your trades will occur automatically without you having to do anything at all once the system is set up and running.
6. Forex involves the spot market, the futures market, and the forward market. These are the three different ways that traders can earn a profit on Forex.
7. Forex currency trading is not for everyone, and this activity does have some risks involved. You should never place money you can not afford to lose in this market, just like any other investment.
8. Using a Forex demo account initially is a very smart move. These accounts allow you to get used to the market while making paper trades, and this allows you to avoid some of the most common and costly mistakes made by Forex traders.
9. Forex currency trading in the spot market uses the current price for the currencies involved in the trade. In the forwards and futures markets the price is set between the two parties to the deal.
10. Before you start placing any of your capital at risk you should determine which Forex trading strategies you will use. Strategies can help you hedge against unacceptable risks and losses.