By Wasatch
In the financial world there has been a lot of buzz about Forex or foreign exchange trading. This is a brief overview and the steps to start trading.
Instructions
Step 1
The world currency market, forex, fx or foreign exchange evolved in the early 1970 when world currencies gradually became free floating instead of pegged a government exchange rate against the U.S. dollar or other major currency. There are many reasons for this. As markets became more global corporations needed holdings, payroll and investment money in other currencies. A market developed similar to the stock market or commodities market to accommodate large trades.
Step 2
First find a mentor. Having someone to guide you at first is important. Some trades specialize in world regions like Asia or Europe. Some work mainly with a few pairs of currencies. Work with someone that is successful in an area you want to try.
Step 3
Second decide on a niche. There is so much diversity in countries and so much information that affects currency values that most traders specialize in either a pair of currency or small group of interrelated systems or they pick a region like Asia or Eastern Europe and focus only there. You are competing with the best educated and focused people in companies and governments with resources and information far beyond what an individual can master. Find a niche and get familiar with trends.
Step 4
Unlike the stock market share of a company, world currencies do not have a net loss of value. If the dollar rises against the Euro the Euro falls and so forth. If a currency goes up it is being valued against another currency that is falling. That means economics, political stability and many other factors play a roll in movement of a currency. War, crop failure on a wide scale, weather and major events all play a part as well as the general attitude about a countries direction and government economic policies.
Step 5
Find an online exchange that will let you set up a virtual account. You can start with $5,000 or $50,000 and play trades they way you think you would and see if over time you are losing or gaining money. If you can't profit in the virtual account don't throw in your own money yet.
Step 6
Watch how announcements and cycles affect currency value. Unlike the stock market share of a company, world currencies do not have a net loss of value. If the dollar rises against the Euro the Euro falls and so forth. If a currency goes up it is being valued against another currency that is falling. That means economics, political stability and many other factors play a roll in movement of a currency. War, crop failure on a wide scale, weather and major events all play a part as well as the general attitude about a countries direction and government economic policies.
Step 7
Form or join an investment club. If you feel like you can make money in currency exchange join with others and combine your knowledge. Don't pool your funds unless you set up an entity to do that so you do not get outside any government and tax regulations and become SEC regulated as a stock offering. keep the group a group of individuals who learn and share knowledge together, but trade on their own. If you plan to pool money do it in legal parameters and set up the account correctly.
forex currency exchange
