An Explanation of Forex Trading

Forex trading means the simultaneous buying of one currency, and selling of another. The currency of one country is exchanged for that of another. The currencies are always traded in pairs such as US Dollar/Japanese Yen (USD/JPY), Euro/US Dollar (EUR/USD), Great Britain Pound/US Dollar (GBP/USD).

More than 80% of daily forex trading involves major currencies like Australian Dollar (AUD), British Pound, Canadian Dollar (CAD), Japanese Yen, Swiss Franc (CHF), and the US Dollar. Forex Trading is not centralized on an exchange. It is a 24-hour market, and trading moves from major banking centers like Wellington, Sydney, Japan, London and New York - in that order.

Trading

In Forex Trading, there is a bid price and an ask price, and the difference of the two is called the spread. The bid is the price at which buyers are willing to buy, and the ask is the price that sellers are willing to sell at any given time. The prices are always 5 digit numbers, irrespective of where the decimal point is placed. For example, EUR/USD has a bid price of 1.2641 and an ask price of 1.2644, thereby yielding a 3 pip spread. In another example, the USD/JPY bid price is 107.09 and ask price is 107.12.

An Explanation of Forex Trading

A transaction takes place when one currency is on the up, and another is going down. Choosing the right currency will ensure a profit.

Margin is collateral for a position. If the market moves downward, the forex trader will ask the investor for additional funds by way of a "margin call". In case of insufficient funds, the trader will close the open positions immediately.

A "long" position is one in which the investor buys a currency at one price, with the expectation of selling it later at a higher price. A short position is one in which the investor sells a currency with the expectation of buying it back at a lower price, expecting the currency to fall. Every forex trading position taken means that the investor has gone long in one currency, and short in the other.

An Explanation of Forex Trading

Forex Broker Info provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. Forex Broker Info is the sister site of Incorporating in Florida Web.

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FX Trading

Trading money in the global markets can be great way to make more of it, but it can also be a lesson in how to lose money quickly. More than trillion is traded every day on the foreign currency exchange (Forex), and yet no centralized headquarters or formal regulatory body exists for this form of trade. Foreign currency exchange is regulated through a patchwork of international agreements between countries, most of which have some type of regulatory agency that controls what goes on within their respective borders. Thus, the foreign currency exchange actually is a worldwide network of traders who are connected by telephone and computer screens.

It is very important to understand money jargon in FX trading. The world of foreign currency exchange has a unique language of its own. Prices are quoted two ways, meaning that when one trader talks price with another, they state their respective prices in terms of what exchange rate they will pay to buy it and what they will take when selling it. Bid and ask price differences, or spreads, usually are stated in pips or hundredths of a currency units. Spreads normally are no more than ten pips.

Trading

Pips are the smallest incremental price movement permitted in the currency market. Although most transactions deal in thousands or millions of dollars, yen, Euros or other currencies, and a one-cent spread can equal thousands of dollars, most currency price quotes nevertheless are extended out to four decimals. Many times, traders quote only the last two digits or the small numbers, because the incremental changes are so small only the last two digits matter. As a trader in FX trading you need to think in terms of the host currency when receiving a quote for direct exchange, which would be an exchange based on the value of the host country's currency.

FX Trading

FX Trading

FX Trading provides detailed information on FX Trading, Online FX Trading, FX Currency Trading, FX Trading Platforms and more. FX Trading is affiliated with Online Forex Trading Systems [http://www.e-OnlineForexTrading.com].

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Online Trading Advantages and Disadvantages

Online trading, or direct access trading (DAT), of financial instruments has became very popular in the last five years or so. Now almost all financial instruments are available to trade online including stocks, bonds, futures, options, ETFs, forex currencies and mutual funds. Online trading differs in many things from traditional trading practices and different strategies are needed for profiting from the market.

In traditional trading, trades are executed through a broker via phone or via any other communicating method. The broker assist the trader in the whole trading process; and collect and use information for making better trading decisions. In return of this service they charge commissions on traders, which is often very high. The whole process is usually very slow, taking hours to execute a single trade. Long-term investors who do lesser number of trades are the main beneficiaries.

Trading

In online trading, trades are executed through an online trading platform (trading software) provided by the online broker. The broker, through their platform offers the trader access to market data, news, charts and alerts. Day traders who want real-time market data are provided level 1.5, level 2 or level 3 market access. All trading decisions are made by the trader himself with regard to the market information he has. Often traders can trade more than one product, one market and/or one ECN with his single account and software. All trades are executed in (near) real-time. In return of their services online brokers charge trading commissions (which is often very low - discount commission schedules) and software usage fees.

Online Trading Advantages and Disadvantages

Advantages of online trading include, fully automated trading process which is broker independent, informed decision making and access to advanced trading tools, traders have direct control over their trading portfolio, ability to trade multiple markets and/or products, real-time market data, faster trade execution which is crucial in day trading and swing trading, discount commission rates, choice of routing orders to different market makers or specialists, low capital requirements, high leverage offered by brokers for trading on margin, easy to open account and easy to manage account, and no geographical limits. Online trading favors active traders, who want to make quick and frequent trades, who demand lesser commission rates and who trade in bulk on leverage. But online trading is not here for all traders.

The disadvantages of online trading include, need to fulfill specific activity and account minimums as demanded by the broker, greater risk if trades are done extensively on margin, monthly software usage fees, chances of trading loss because of mechanical/platform failures and need of active speedy internet connection. Online traders are fully responsible for their trading decisions and there will be often no one to help them in this process. The fees involved in trading vary considerably with broker, market, ECN and type of trading account and software. Some online brokers may also charge inactivity fees on traders.

Online Trading Advantages and Disadvantages

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