How Do You Make Money in Currency Trading
July 28, 2011 11:50 AM EST
What is Currency Trading?
Currency trading or the foreign exchange trading (more common referred to as Forex trading) involves trading one currency for another. The foreign exchange market is at present, the largest financial market in the world. At any time, forex trading is made between large banks, central banks, multinational corporations, governments, currency speculators and even other financial markets.
The global central bank organization Bank for International Settlements (BIS) reports that the average daily trade in the global forex and related markets currently exceeds three trillion US dollars--- that's just in a day, making it several times larger that all the stock markets in the U.S. Combined. Bear in mind that trading in the forex market is done through out the globe with little or no hard cash changing hands.
How Do You Make Money in Currency Trading?
You buy or sell currencies in the foreign exchange market. Placing a trade in the forex market is quite simple. If you have previous experience in stock trading, you will easily find footing in the foreign exchange since the mechanics of a trade in forex are very similar to those found in other markets. The object of trading in forex is to exchange one currency for another in the expectation that price will change: that the currency you bought will increase in value compared to the one you sold.
For example, if you are trading the currency pair EUR/USD and you purchase 10,000 Euros at the EUR/USD exchange rate of 1.1800 (Your 10,000 Euros is equal to 11,800 USD). Two weeks later, you exchange your 10,000 Euros back into USD at the exchange rate of 1.2500 (Your 10, 000 Euros is now equal to 12, 500). Hence, you earned a profit of USD 700.
If you are new to forex trading, you might be wondering what is an exchange rate. An exchange rate is simply the ratio of one currency valued against another currency. As in the example, the EUR/USD exchange rate indicates how many Euros can purchase one US Dollar, or how many US Dollar you need to buy a Euro.
Do you want to learn more about about the foreign exchange market? Here's a list of material for you that can help you jump start your forex trading career:
Download the Introduction to Foreign Exchange written by Chris Gore of the award-winning forex broker firm GO Markets. In this e-book, Chris Gore lays down the Golden Rules of Trading that will help you get an edge in the forex trading market.
Do you learn more easily through live interaction with a teacher? That's a problem solve with Knowledge to Action seminars and training with reknowned forex trader Greg Secker. At present, Knowledge to Action conducts free training around Australia and New Zealand for a limited duration. You can check out their seminar listing and book yourself a seat before it rans out at a key city near you.
Are you done with the basics of currency trading, but still find yourself on loose ground? A forex signal provider can help you with timing your trading in the foreign exchange market. ZuluTrade ranking system helps you choose the right signal provider for you.
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