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What Is Forex Currency Trading In The Fx Market

What is currency trading? It is something that sounds quite simple and many people speak about it as if the meaning is obvious, but not everybody knows what it really is and how it works.

Currency trading is also known as forex trading. Forex (sometimes written FX) is short for foreign exchange.

You probably know that the value of each country’s currency goes up and down according to how well the country is doing compared with others. So for example, the value of the Canadian dollar against the US dollar will be higher or lower depending on reports of the Canadian and US economies. The same thing happens with all other currencies.

Currency values are constantly changing, so a trader can easily deal in them to make a profit. He or she can buy when a currency is worth less and sell when it is worth more, just as a stock trader would do.

The difference is that where stocks have only one value, their value on the stock exchange, a currency has different values compared with each of the other currencies. So for example the Canadian dollar might rise in relation to the US dollar but at the same time it could fall in relation to the Japanese Yen, if the Yen rose even higher.

Principles Of Currency Trading

Most forex market trading is margin trading. This means that instead of buying the whole value of the currency, you can invest in only a percentage. This allows a small deposit to control larger amounts. The principle of it is that a currency is very unlikely to change in value by more than a certain percentage of its value.

To simplify trading, currencies are traded in what is called pips, or price interest point system. These are the units of trading. They give a standard for comparison as the currency values change relative to each other. So you will hear traders talk of a currency gaining or falling by a certain number of pips, rather than talking in dollar terms.

How To Make A Profit With Currency Trading

In order to make a profit with currency trading, you need to have some idea of the likely movements of currencies. This knowledge can be gained by analyzing the markets or by applying a system that experienced traders have figured out from their own analysis.

If you are a beginner it is probably better to be receiving your information and analysis from somebody with more experience at first. You can pick up a lot of different systems online and watch how each one does, or you can work with an automated system. These are known as expert advisers or forex robots, and they will make the trades for you when the time is right according to the settings that you have programmed.

If you use an automated forex system you do not need to know what is currency trading in so much detail, although as with all things, the more you know the more success you are likely to have.

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Sunday, May 17th, 2009 Introduction No Comments

Fx Online Trading: A Brief Introduction

For a novice, forex currency trading or international currency trading as it is sometimes known, may seem to be a whole new world but the nuts and bolts of the system are relatively straight forward once you have learnt the basics. You initially just need to get an understanding of the terminology and trading terms to see how the markets work.

 

Making big money quickly is what forex currency trading is all about. It is possible for investors to make big profits very fast because the rates of exchange on the forex market can rise and fall very quickly. This means of course that it is risky and there is also a chance of losing big, just like most things that have the chance of big returns on your investment.

 

As you will know if you have ever exchanged currency for a vacation, the rates constantly move, even throughout the day. For example you may change $100 into Euros before your European trip, and then find that you have not spent it all when you return so need to change it back to US Dollars. The exchange rate will probably have moved whilst you were away and you could have made a small profit after charges once you have changed it back.

 

Foreign currency trading is all about changing currencies hoping to make a profit all of the time, but instead of changing money at the bank they use a broker or more often these days an online currency trading system. There are actually many similarities to stock trading where your small deposit can be used to leverage much bigger deals. One difference from stock exchange trading is that fx traders are not limited to dealing in one country.

 

You can trade any two currencies wherever you live. This means that the market is truly international. Due to the various time zones around the world, the forex trading hours are all day long from Monday morning in Australia to Friday afternoon in New York.

 

Each of the major currencies is represented by 3 letters: USD for the US dollar, EUR for the Euro, GBP for the British pound,  CHF for the Swiss franc, JPY for the Japanese Yen, , CAD for the Canadian dollar, AUD for the Australian dollar etc. The exchange rate between two currencies may be expressed like this: USD/GBP 0.68. This means that to buy one US dollar you will need 0.68 British Pounds.

 

If you want to start out in fx trading you will need to look for a broker that you think are trustworthy that can set you up with a currency trading account. It is worth shopping around and checking the forex trading forums for tips and recommendations. Check out how long the company has been in business and what your rights and liabilities will be. Read all of the fine print so you are not surprised by additional charges that you were not expecting.

 

You will probably also want to use a bot to do your trading for you. This is automated forex trading software that can trade 24 hours a day according to the rules and restrictions that you set for it. There is usually a demonstration option so that you can paper trade with the online currency trading system for a while before you actually bite the bullet and trade with real money. There are many forex robots on the market and most of them come with full instructions and currency trading tutorials.

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Wednesday, May 13th, 2009 Introduction No Comments