People who learn how to trade forex join the largest, most active market in the world. This wonderful opportunity pits one country’s currency against another’s and makes or loses money on the minute by minute swings. Individuals who hope to capture some of these profits invest the money themselves or find a currency broker to oversee the transaction. Either way, individuals learn about global conditions; this instantly makes life more interesting.
There many ways to start this investment process. The easiest one is to research different currency brokers and open a practice account with one of them. This account allows the investor to make trades in real time without risking real money.
Practice accounts include different currency pairs and charts which show the tick by tick action. Currencies are always traded in pairs, like Euro/US dollar. Unlike the stock market where stockbrokers get commissions, currency brokers make their money on the spread. The spread is the difference between what the currency is trading at and the price investors pay when they buy or receive when they sell. This spread varies between brokers.
Opening a trading account with the currency broker is as easy as opening a checking account. Forms are filled out and money is transferred. Then, the investor simply turns on the computer, opens the trading program and enters the orders using the funds in his or her investment account.
Investors apply whatever strategies work best for them. Some people follow world news and place orders based on that information. Others watch the action of the currency on charts and try to predict future movements based on history. For example, many people use candlesticks for information. A candlestick is a colored rectangle which may have wicks on one or both ends. The solid body indicates where market opened and closed. The wicks indicate the highest and lowest prices of that bar. A black or red body shows the currency price moved down while a white or green body tells investors it increased in value. The bars are based on time with common time frames of 15 minutes, 30 minutes, 60 minutes and 4 hours.
Currency brokers, just like stockbrokers, offer different levels of service. The investor can be involved in making decisions or leave the transactions to the discretion of someone else. Anyone who turns money over to a company checks out that business, performance and stability. Because the currency market is a worldwide enterprise, the company can be located anywhere. Some countries provide little or no oversight over currency brokers’ actions leaving investors totally at the mercy of the agent.
Forex trading offers an exciting opportunity to make money. A person can handle the minute by minute decision making or turn the details over to a professional. Currency brokers have many programs and can accommodate any request.