What is Forex trading?
The financial market is a huge worldwide market through which
you can trade in gold, silver, currencies and shares, among other things.
Currency trading is known as FOREX and can be traded 24 hours a day 7 days a week. In Forex trading you stake money on the exchange rate of one currency against another.
For example, the EURO against the British pound (GBP). For every point or pip (as its called) that the price moves in the direction you anticipate, you make a profit. The money you have staked e.g. (£10.00) is multiplied by the amount of pips or points, that the price moves. For example, if you stake £10.00 and the price moves 10 points in the direction you have guessed, your profit will be £100.00. Quite often the pips move far more than 10 points in either direction. This is where
fortunes are made.
How do I get started? You will need: A computer with internet access.
A “bank” of around £100.00 - £300.00.
A weekly summary of the currency markets.
An account with a spread betting company.
You can find both a spread betting company and a weekly summary of the currency markets on the internet.
There are various companies that will allow you to place your stake with them by setting up an account. You will also need to create a stop-loss so that if the price goes in the opposite direction you have staked, your bet will be cancelled after a few points movement. This makes sure that you do not lose too much money. Your spread betting company can set up an automatic stop loss for you.
The weekly summary tells you what the expected change in prices may be, for a particular week. Based on this information, you are making a guess about which way the market will go – up or down.
It is important to know when an announcement is due to be made as you will place your stake a few minutes before.
Opening an account Many companies who place stakes will provide free information and seminars about the market and the best ways of making money from the FOREX market.
An account is very easy to set up and can be done in a matter of minutes. However there are times when you should not trade as you will risk losing a lot of money.
It is also important to remember that the FOREX market is a form of betting and carries high risks of loss. However, if you follow the rules carefully and do not bet excessively over a long period, this is probably one of the quickest ways to make very large amounts of money for little or no effort on the stock market.