Forex Trading Tutorial on Online Foreign Exchange Currency Trade

Filed in Learn Forex Trading by on September 7, 2008 0 Comments • views: 562

Your Basic Free Forex Trading Tutorial

The Basics of Currency Trading

Welcome to the exciting you’re most useful forex trading tutorial! The world of foreign exchange trading used to be dominated by only the largest corporations and the wealthiest businessmen but the Internet has made it possible for smaller investors and individuals to have a share of the world’s largest market. All it will take for you is a click of the mouse button to broker your investments.

On a daily basis, changes in foreign currencies are not exactly earth-shaking. It is common for currency pairs, for instance the dollar vis-à-vis the euro, to gain or lose less than one cent or 1% in currency value. Profits are influenced by various factors. Any trader must have at least basic knowledge of currency trends and movements to be able to succeed, which is the purpose of this forex trading tutorial. Read on to understand exchange rates better and acquire basic knowledge that you need in order to participate in the forex trading.

Forex Trading Defined

For the sake of conciseness, this forex trading tutorial will define foreign exchange trading as the venue for trading currencies. It involves purchasing and selling currencies on the prediction that the one being bought will have higher value over the currency being sold.

Not many people are aware as to the extent of the importance of currencies. Currencies are exchanged in every foreign business transaction and industry, be it travel, import, and export. This is why the forex market is the largest financial institution worldwide, with some USD 2 billion traded daily. Another special aspect of forex trading is the fact that is conducted electronically over the counter, either by phone or the Internet, without any single regulatory body. It is open 24 hours a day and for five and a half-days each week.

Trading Channels

Forex could either be traded through the spot market, the forwards market, and the futures market.

Spot market – It is the largest market where the forwards and futures markets are essentially based on. It has surpassed the futures market as the most popular forex trading venue with the dawn of the Internet. The spot market is where currencies are traded by their present prices. Once a “spot deal” is closed, the two trading parties seal the settlement in cash. When people discuss, forex trading, they are usually referring to the spot market.

Forwards and futures markets – They are more useful for large firms that are looking to hedge forex risks to a specific date. They deal in contracts, set a specific price per unit and a future date for any settlement. These markets offer protection versus huge risks.

Majority of traders focus on the most liquid currency pairs, including the US dollar, the euro, the British pound, the Japanese yen, the Swiss franc, the Canadian dollar, and the Australian dollar. Around 85% of daily trading revolves around the mentioned currencies while about 5% involves foreign trade.

We now encourage you to take advantage of the Internet to get you started on your forex trading endeavor. Now that you know about the basics of forex trade, surf for other more detailed forex trading tutorials that offer step-by-step instructions and even test accounts for you to learn the ropes by yourself through practical experience. Furthermore you must understand that you need to use money in order to make big profits on the forex market, and this is where this complete forex package is highly recommended by us:

Education Forex Trading

Education Forex Trading


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