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The Essentials Of Forex Trading

Author : Alex Harper

The forex (foreign exchange) market is the largest financial market in the world with around 3 trillion dollars being exchanged every day. In the last decade this market has opened up to retail (smaller) traders, before 2000 it was mainly large banks and corporations that utilized the currency market.

Forex market trading involves speculating on which currencies will appreciate or depreciate versus another. Just like a stock represents the current value of company, a currency represents the current value of a country.

One of the biggest advantages to forex trading is that you are not required to pay a commission on each trade. You are charged a few points as you enter the trade, so if for example you enter on a long trade for the Euro at 136.00 and the spread is 2 pips (points) then you would really be entering at 135.98. So in this case you would need the trade to move 2 extra points past your take profit point (example: 20 pips) to close the trade.

Forex trading has become so popular that there have been advertisements on televeision in recent years by forex brokers. The majority of forex brokers profit from the losses of their clients. Ideally when you make a trade your order would be passed through to the interbanking system but because the brokers know that most traders will lose, they take the other side of your trade.

Most forex brokers have an interest in you losing because this is how they gain. This gives them a strong edge. One of the most popular forex softwares Metatrader, is known to have plugins for the brokers which manipulate the time you can enter a trade. This means that you often won't be able to get the price you are wanting if you trade short term. Let's say that you click to enter a trade and the price goes against you right away, your order will typically be accepted and you will be minus a few pips. If on the other hand you click to enter a trade and it goes in your favor a few pips, often your order will not be entered and you will get the requote button. This makes it challenging to make short trades, however if you are making trades that last for hours or days it will not affect you that much.

The forex market is open 24 hours a day, 5 days per week. It is the only market that doesn't sleep and there are many opportunities for people all around the world. Be sure to spend a lot of time learning about the business before you start trading with real money.

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Tags:   forex training, currency trading course, learn forex trading, forex course, forex scalping, forex coaching, free forex training

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Submitted : 2010-11-23    Word Count : 460    Times Viewed: 474