Forex trading is a form of investment that can easily deplete any investment bankroll you have if you’re not careful. It offers the chance to make so much money though that investors just can’t stay away. If you want to get into Forex then you need to know some of the basics of Forex trading. Not to worry, what we’re going to list is some very basic information that will get you going. You can find complete guides (sometimes in PDF format) on the internet that will provide you with much more in depth information. Lets get started.
• Forex trading isn’t done the way you might think. When you trade Forex you have to do it in different sized lots. These lots can be as small as 1000 units of your countries currency or they can be as high as 100,000 or more. You can get started on the lowest level for a very small amount of money.
• Forex trading is done in pairs. It isn’t like the stock market where you have the chance to purchase and sell an individual stock. You always have to purchase one currency and then sell another one in order to have a chance to make a profit. Believe it or not this is one of the main reasons why leverage is so good.
• Most Forex trading is done using the same 18 currency pairs. When it comes to stocks you have several thousand you could be selecting from, which makes picking the right one tougher. Forex offers you the chance to zero in one prime opportunities and specialize much better. You can trade other currency pairs, but you might have a hard time finding them offered on a lot of broker websites.
• Several things move currency and open the door to profits for you. The main thing would be supply and demand. When more dollars are needed in certain parts of the world for instance, then the value of a dollar is going to go up. When there isn’t enough of it in circulation, then the value of a dollar is going to go down.
In order to understand the basics of Forex trading you need to start from the beginning. That would be educating yourself on the different terminology such as pips for example. Once you have a clear understanding of the terminology then you need to learn basic methods to get you started. Find a good broker and open up a mini account. This can be done for a few hundred dollars.
You shouldn’t worry about the small sum of money required to open up a mini account. This would be a time of practice for you. You’d be learning how Forex trading works and getting used to doing it. After you’ve done this then you’d want to start looking at some strategies to help you make money consistently. It’s much better to use certain methods once you’ve gone through the other two steps mentioned. Don’t worry if you don’t have the money to open up a mini account either, you can get a free virtual account to practice with if you want.