Business, Investing, Making Money

Everything That You Could Ever Want To Know About Forex (2 of 4)

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How To Learn Forex The Smart/Right Way

Many people see the Forex market as a place to invest for the future. Many of these have previously invested in the stock market with mixed results and look to the currency market to increase their wealth. The problem is that most of these people ignored the fundamentals of the stock market and are behaving the same way with the currency market. If you learn Forex trading properly, you will succeed. Ignoring the fundamentals will bring you the same results you had in the equity markets.

If you want to become a successful trader, it is important that you understand the basic principles about Forex trading. The best way of doing this is by finding a reliable trading platform that you can use to learn from. Interest in currency trading has been growing at fantastic rates. Online trading is even more spectacular because you can now trade from your home or office. Major currency dealers have met this demand by installing online trading platforms that are easy to learn and use. Once you register with one of these traders, you can begin learning currency trading without spending any of your money.

But it is not just these companies who have set up trading platforms who can help you to learn about Forex trading. A search on Google for “learn forex” will bring you hundreds of websites with different offerings. You will have to pay for some of these offerings while others are at no charge. You will also find websites run by traders who just enjoy sharing their knowledge with you. In addition, many websites provide general and specific information about the currency market.

Such sites offer a basic education to speed up your learning. You can watch videos online or download special software. You can also browse through forum posts or attend webinars. Also, these sites include ebooks and articles that can help you to gain basic knowledge about currency trading. Each site will provide you with a different method for learning about trading, and you can do all of it online, so no need for you to wait for CD’s, DVD’s or books to arrive in the mail.

Some of these materials are also available off-line if you have a slow Internet connection. But, in almost all of these materials you will find the basic information you need to start trading.

However, if you are looking for a more personal approach, or want to speed up your learning even more, you can attend an off-line seminar. Of course, some of these seminars are also available in the form of teleseminars and webinars, but you get a physical person to talk about and discuss your concerns. You also get the support of the other seminar attendees who may have the same concerns as you do. They can also help you understand material that they have mastered.

Physical seminars are more expensive than other means to learn Forex trading because the organizers have to secure a suitable room and provide other supplies that help the attendees make the most of the training. For example, binders, photocopies of charts, graphs and other educational material. However, if you can afford the prices for these events, it is worth your while attending at least an introductory seminar. You would speed up your learning of the Forex market.

What Moves The Forex Markets?

Investors in any market, be it securities or currencies, wants to know what causes price fluctuations so they can predict them and make a profit.  While stock investors research publicly traded corporations in order to make trading decisions, those on the Forex must consider what influences the currency exchange rates between nations.  Because it is so volatile with significant fluctuations in short term prices, it is especially important for the Forex trader to understand wh…

Investors in any market, be it securities or currencies, wants to know what causes price fluctuations so they can predict them and make a profit.  While stock investors research publicly traded corporations in order to make trading decisions, those on the Forex must consider what influences the currency exchange rates between nations.  Because it is so volatile with significant fluctuations in short term prices, it is especially important for the Forex trader to understand what moves the markets in order to be successful and make a profit.

Partly because trades occur 24 hours a day between Sunday and Friday afternoon, the Forex is a very volatile market. Just as with equities, pricing on the Forex is influenced by economic and political factors facing the nations involved in the currency pair.  Because the U.S. dollar is used to back 90% of all the transactions on the Forex and its economy plays such a significant role in the world economy, economic data released by the government will affect market prices, temporarily.

Here are some of the prime releases that Forex scalpers or day traders tend to look at when determining whether or not to enter a position:

1. Interest Rate Decisions

2. GDP rate increase/decrease

3. Unemployment data

4. Inflation/Consumer/Produce price

5. Retail Sales

6. Consumer Confidence Surveys

7. Business Confidence Surveys

8. Trade Balance

9. Manufacturing Confidence Surveys

However, while all of these forces no doubt play a short-term role in price movements on the Forex and other financial markets, their influence is very temporary, and the prices soon reflect them. It is not common for Forex scalpers or day traders to enjoy long-term success because the volatile nature of the market makes losses more likely with more trading.

There is another force that plays a role in the movements of all financial markets, and that’s human behavior. Indeed, Psychology is a very big factor in any investment decision and its effects can be studied in financial charts.

4 human emotions play very big roles in the price movements on the Forex:

1. Greed

2. Fear

3. Faith

4. Hope

Greed compels even technical traders to ignore stopping points and chase a trend too far, to the point of loss or losing a significant portion of profits. Once an exit point has been reached, cash out.

Fear of loss is a very common human emotion and it definitely causes many investors to take a loss too hard and quit investing. However, simply setting acceptable stop/loss orders will prevent you from losing more than you are comfortable with.

Even faith and hope can cause us to chase profits too far or not get out when losses start to mount. Technical analysis, continuous back testing, and sticking with an investment strategy while being open to adjustment, these are all common traits in the most successful traders. Although the economic indicators and news releases do play a short-term role in prices, it is ultimately human psychology that moves the Forex.

Who Trades Forex Currencies?

Fifteen years ago, you would not hear about people trading on the Forex market, at least not real people. Until that time, only central banks, large hedge funds, and other financial giants like Warren Buffet could afford to dabble in the currencies markets. Today, however, the Forex is the most fluid market in the world, with approximately 5 trillion dollars trading hands every day, Sunday through Friday, 24 hours a day.

Investors from all over the world are drawn to the Forex for the following reasons:

1. Trading occurs 24 hours per day, 5 days a week so investors always have access to brokers and the ability to trade and make profit

2. Online trading platform makes trading easy and most can be personalized to suit your particular trading style and needs

3. Very large and liquid market making it easy to enter and exit positions

4. Volatile market that is prone to rapid price fluctuations, and the potential to make big profits, or take a big loss.

5. Trading is leveraged but brokers tend to offer low margins, like 1% f the transaction, depending on various factors.

6. No commission for trading. Brokers make their money on the spread, or the difference between the ask and bid price

7. Ability to set stop/loss points and limit potential loss while pursuing maximum profit

Basically, the Forex offers the thrill and chase you might find in Vegas along with the technical analysis and detective work people associate with Wall Street. As far as who actually trades on the Forex market, there are 2 basic groups emerging as the majority players:

1. 21-39-year-old, computer savvy professionals looking for an additional revenue stream with unlimited potential, a convenient and dynamic investment interface, and the ability to limit loss while maximizing opportunities. This group of investors tend to either have a degree or have taken some college courses. While many are putting some of the profits away for retirement, most investors in this demographic are looking for additional income to help pay bills, finance lifestyles, and perhaps pay off mortgages early.

2. Baby Boomers: There are nearly 80 million official members of the baby boomer generation nearing  or are already 60, that are focused on retirement/retirement planning. Only 25% approximately, report having $50,000 or more set aside for savings aside from their primary residence, and many are looking for ways to boost retirement funds. The convenience of the Internet combined with the large potential for profits, make the Forex an increasingly attractive investment option for baby boomers hoping to add some real money to their retirement account in short order. Baby boomers especially love brokers who offer free demo accounts for the investor to learn the ins and outs of the Forex market before actually risking any money.

Like any investment, the Forex market presents risk for any potential investor. It is the risk that creates the opportunity for both profit and loss. And, like most investments, taking the time to do the homework and identify trends, helps investors make more informed decisions. For anyone looking to make a real boost in their income or retirement account, the Forex offers an opportunity to earn unlimited profits, but the losses can mount as well, so be sure to place stop/loss orders with any position to limit exposure.

Everything That You Could Ever Want To Know About Forex (3 of 4) –

Risk disclosure: *All investments involve risk. Before making any financial or investment decisions, we highly advise that you seek the advice of a properly licensed and trained investment professional.

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