Forex Trading for Beginners

By: ForexTradingDubai.com

Forex is the abbreviated form of Foreign Exchange. Forex trading is the world’s largest trading market of trading international currencies. Forex market is opened 24 hours a day on all the working days. This type of trading is mostly done by the bankers. Forex market allows the traders to buy the currency and sell it for profits. Because forex trading market is a global market and traders from all over the world trade their currencies in this market so the volume of total trade done everyday is very vast. Large corporate investors enjoy many benefits of trading in this market such as enormous liquidity, trading in all currencies, 24 hour trading system and globally operated market.

Enormous liquidity means more $4 trillion of trade is done everyday. This shows that traders are always ready to trade. Forex trading market trades in all currencies of the world so anyone can be a part of forex trading whenever they wish to. Forex market operates 5 days a week and 24 hours a day so traders have more and more time to earn profit or recover from their losses. There is no geographical barrier in this trade and traders from any country of the world can trade at anytime in this market. There are many big and small traders involve in forex trading from all over the world and benefits are enjoyed not only by the big traders but also by the small traders.

Forex is a rapidly changing market and its rapid changing nature provides the chance to traders to make money in short time. Forex traders can make money in both situations of rising and falling market because even in falling market trend some currencies might go positive and so trading in these currencies will bring profit. Traders having low capital base can also earn more by doing large volume of trading. Options of zero commission trading are also available.

All forex transactions are the results of a currency pair. Let’s take an example, there are 2 currencies Euro expressed as EUR and Dollar expressed as USD. Now note the values of the two currencies and calculate the ratio. This ratio is called the exchange rate and is always changing depending on the values of EUR and USD. The exchange rate is expressed in 4 decimal places, for example, EUR/USD=1.4087. The rightmost digit of the exchange rate is called ‘Pip’. If the exchange rate that is expressed in EUR/USD changes from 1.4087 to 1.4088 so this means that the exchange rate has increased by one pip. Pip is the smallest unit of forex trade.

Now if a trader trades when the forex rate expressed in EUR/USD = 1.4087 then to buy 1000 euros the trader will have to pay $1408.70. The trader can sell his euros when the value of EUR/USD rises more than 1.4087. So if the EUR/USD rises to 1.5012 then trader can sell his euros to earn $1501.2 and will have the profit of $92.5. Trader can do this many times a day depending on the rise and falls in the exchange rate and earn the profit every time. There is no fixed pattern in which market can go up and down but still trader should first study the trend before actually beginning to play. There are many sites online providing the platform for forex trading. These sites also allow playing with virtual money so if someone wants to gain experience first before entering in the market then he can register for a demo account and play with virtual money. After the trader is satisfied with his trading capabilities, he can use his real money to do forex trading.

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