Forex market trading: The basics for beginners

Forex or foreign exchange trading has changed dramatically with the rise of the internet. Today, you no longer have to be working for a bank or a financial institution in order to be a forex trader. Thanks to the internet, you can now trade in a forex market anytime from anywhere in the world. Many people are actually trading from their own homes and are quite successful. These days it’s very common to see people trading at home and making a great living with forex. So who exactly is a forex trader and what does he do?

A Forex trader, exchanges currencies
A foreign exchange trader is basically trading foreign currencies. As a forex trader, you sell one currency that seems to be falling in value, to buy another that seems to be rising. Of course there are always two currencies involved (”a currency pair”), obviously because if your buying dollar, you have to have another currency to trade it for.

Start trading with one currency pair
As a beginner forex trader, it’s a good idea to only trade one currency pair. A common currency pair used by many beginner is the EUR/USD, which is euro against the US dollar. EUR/USD are a good pair for a beginner trader, because there are much more information and resources available to learn from for this pair than any other. And while its the biggest forex market, it’s relatively low cost and a stable market.

Forex market is a fast moving market
Forex market is an ever changing market, currency prices rise and fall steeply and very quickly. There is a high percentage of risk involved in forex trading. You can lose money very easily and in no time at all. So, loss of money is part of forex trading no matter what. The best thing to do is to simply make sure you make more money than you lose. At the same time the rewards can be tremendous as well, if you learn when to buy and when to sell.

Complete focus is a must when trading
Unless you use a robot to control your currency trading, you will also need time where you can concentrate on learning a profitable system and then on trading itself. There are many types of software that can be programmed to trade for you, but if you want to learn and trade on your own, you need to spend some time learning a profitable system. You will need at least a couple of hours each day to trade. The best way to trade, specially for a beginner is to use a quiet place where you can focus on trading and making decisions. Paying close attention is crucial as the market changes every second and you do not want to miss an opportunity to to either buy or sell a currency.

Forex is a High Risk Investment
Forex is for risk takers. Unless you are a risk taker and a person who likes the challenge of risking and trying to make a profit in short amount of time in a very fast moving market, knowing the risk of losing all the money, you should stay away from forex. To make money trading foreign exchange, you will have to make very high risky decisions at times. So its a good idea to learn as much as you can before you get into it. If you are a goal driven individual who doesn’t mind the risks involved, there is a huge potential in forex for you.

If you do start trading, make sure you always are updated with the current financial news, and some times even political news of not only your own country, but also of those countries who are influential in international affairs. Forex market is influenced by financial and political events, therefore keeping an eye on what’s happening, may give you the upper hand in buying or selling the right currency at the right time. After all forex is all about knowing when to buy and when to sell. Mastering the right timing to exchange currencies enables you to make a substantial amount of money, as a foreign exchange trader.