At the mention of forex trading, we immediately become intimidated. But in reality, traders in this business are saying that forex trading is basically not that different from the market that we are used to. The idea that this is a very complicated business is due to the many tools used by different traders here. Nonetheless, the important thing you have to remember is that you need to know about the basics before you start trading.
Let us start with defining forex trading. Forex trading, also called Foreign Exchange (FX), Forex or currency market, is a well-known way of making a profit by trading two foreign currencies. The primary purpose of the foreign exchange market is to assist international trade and investment by allowing businesses to convert one currency to another currency. Recently, it has become all the rage because you can now do it through the Internet and in the comfort of your own home. Forex is the trading of two currency counterparts at the same instance. If you want to start it at your own home, you will only need a computer with internet access because it is done via electronic network or telephone connections, a funded Forex account with a foreign currency exchange broker and a trading system.
You might probably ask just where exactly is this market we are talking about? The truth about this is that forex has no center or even a structure but rather it is everywhere. It is a worldwide decentralized over-the-counter or Inter-Bank financial market. Although some financials banks serve as anchors of buyers and sellers all around the world, transactions are generally made online ‘round the clock with the exception of weekends.
Forex is now one of the most lucrative home businesses in the market today. Many want to try this but are overwhelmed with all the information that they believe they need to digest. But to better understand this online trading, you can start by first having a Forex Trading Course that will teach you the basics if you are a novice and give you tips if you are already an expert.
But just like any business, forex trading is like a game of chance, your investments are always at risk due to several factors that affect the marketplace. Confidence on decision-making will only be achieved if you will just take time to learn more about the basics of Forex like the forex trading strategies from E-books, video tutorials and online tips.
- Forex Trading – The Top Forex Secrets (encourageblogging.com)
There are going to be two factors to watch out for when it comes to the USD/CAD in the next couple of weeks. It’s likely that it will be a tug of war between oil prices and the European financial crisis, more specifically Greece. A classic battle of bulls and bears.
The price of oil is inching upward on positive economic data showing signs of a slow but sustained recovery. This is compounded by the fact that Asia will continue to consumer more and more oil as it ramps up production in anticipation of a global recovery.
This rise in oil is in direction tension with the European financial crisis, which hasn’t been in the news as of late. Although coverage is spotty and the public has become fatigued of hearing about it, there might be a silent disaster brewing in Europe.
In terms of forex trading strategies, here’s how it might affect the USD/CAD. If there is continued low coverage of Greece, and possibly Spain and Portugal, the CAD will get strong as commodity prices rise. The CAD is heavily related to global demand in commodities. Canada produces many of the world’s raw materials, including oil.
If there is more news coverage on the state of the European crisis, look for the CAD to get weaker on that news. Not only will there be an expected decline in the price strength of the CAD, gold and the USD will rise overall.
The USD and oil prices have an inverse relationship, unlike the CAD and oil. As the value of the USD declines, especially if it declines broadly over a basket of currencies, the price of oil tends to climb. This is because it makes it cheaper for foreign currencies holders to buy oil.
If a currency trader has a forex demo account he or she can practice on, the price movements of oil, USD and CAD might be a good one to test out. You can even throw in gold in there for good measure. If the European crisis deepens and there is a drop in oil prices, watch for gold prices to sky rocket even higher. Gold might be what oil was a few years ago.
Forex trading strategies are amongst the more important aspects of your trade. In fact, they are considered to be the key to a successful online currency trading or FX trading. Now, having a good understanding of what these strategies are and how they are used would certainly give you and edge over the other investors.
As you may or may not already know, FX trading is actually very different from trading in stocks and as such, when it comes to significant short term profits, you would definitely need a good grasp of Forex trading strategies. Here are some of the most common ones to help you get started.
Leverage – This FX trading strategy was designed to enable online currency traders to get their hands of more funds than what they have deposited. In doing so, they are actually able to maximize the FX trading benefits that would have been unavailable to them without the additional funds. When you use this strategy, you would be able to use about 100 times the amount that’s in your account that should help you invest in higher yielding transactions this giving your better trading results.
Stop Loss Order – This is perhaps one of the most commonly used when it comes to the different Forex trading strategies because it actually helps investors when it comes to protecting their investment. This strategy would allow them to minimize any potential loss by creating a predetermined point at which he or she would no longer trade. This is extremely beneficial especially to those who tend to forget the limits that they have set for themselves.
All of these Forex trading strategies were designed to help the investor and protect their investment from possible loss. There would always be risks whenever you enter a transaction in the FX market thus it is important for an investor to familiarize themselves with these strategies.