Forex trading is all about the speculation on the price of one country’s currency against another. Being a Forex trader oﬀers one of the most amazing potential lifestyles of any profession in the world, but it is also one of the riskiest. If you are determined and disciplined, you can make it happen.
The way it works is if you think the euro is going to rise against the U.S. dollar, you can buy the EUR/USD currency pair low and then (hopefully) sell it at a higher price to make a profit. If you buy the euro against the dollar (EUR/USD), and the U.S. dollar strengthens, you will then be in a losing position. So it’s important to be aware of the risk involved in trading in Forex, and not only the reward. As a trader you can make a lot of money fast or lose a lot of money fast. The very important thing when dealing in the money market is to know exactly what you’re doing and always know the exact dollar amount you have at risk before entering a trade and be TOTALLY OK with losing that amount of money, because any one trade could be a loser.
Forex is the largest market in the world, with daily volumes exceeding $3 trillion per day. Anyone can open a trading account with as little as $250 at many retail brokers and begin trading the same day in most cases. Straight through order execution allows you to trade at the click of a mouse. It has an advantage over trading in shares in that there are fewer currency pairs to focus on and you can trade anywhere in the world with the only requirements being a laptop and internet connection. There is commission-free trading with many retail market-makers and overall lower transaction costs than stocks and commodities. On top of all that, traders have equal opportunity to profit in rising or falling markets.
All beginners should be aware that trading carries both the potential for reward and risk. Many people come into the markets thinking only about the reward and ignoring the risks involved and this is the fastest way to lose all of your trading account money. If you want to get started trading in the Forex market, get on the right track and study it first. There are a few good sites on the net that oﬀer free courses and it’s critical that you are aware of and accept the fact that you could lose on any given trade.