| The forex, or foreign exchange, is simply a | | | | futures,the market responds to the classical |
| marketplacefor the sale and purchase of various | | | | influencesof "support and resistance." These are |
| world currencies. | | | | simply price levelsthat are determined by |
| Forex trading aims to take advantage of the floating | | | | well-established mathematicalmodels of price action |
| exchangerates of these currencies, which literally | | | | over time, and serve to providethe trader with a |
| fluctuatemoment-by-moment, 24 hours a day. It is | | | | reasonable expectation of the range thata particular |
| this volatilityin the market which creates enormous | | | | market will trade within, on any given day. |
| opportunities for profit. | | | | This fundamental knowledge (which is very easy to |
| Forex trading used to be solely the domain of | | | | acquire),combined with even a minimal amount of |
| largefinancial institutions and investment groups. | | | | technical analysis |
| Thanks tothe advent of online trading platforms on | | | | (also very easy to acquire), gives even the beginning |
| the internet,more and more individual traders are now | | | | traderthe basic tools to trade the profitably. |
| able to participatein the market. There are many | | | | It is widely known that every investment activity |
| online brokers with whomyou can open and fund a | | | | carrieswith it a certain risk of loss, and the forex is |
| trading account. Most of themoffer a free demo | | | | no exception. |
| account, which allows you to learn to readthe various | | | | The extreme volatility of the market serves to |
| charts, evaluate different types of technicalanalysis | | | | amplifythis risk factor at times. It is therefore |
| indicators, and practice risk management techniques,all | | | | imperative that tradersimplement an effective risk |
| without risking any of your own capital. | | | | management strategy from thebeginning. Fortunately, |
| It is important to understand that currencies are | | | | most online trading platforms simplifythis task by |
| tradedin pairs on the forex. While there are countless | | | | providing the ability to place "stop loss" orders,either |
| combinationsof different currencies, it seems that the | | | | at predetermined levels or according to a rule |
| most commonlytraded pairs are: Euro/US Dollar (EUR | | | | specifiedby the trader. In this way, trades can be |
| USD), Great British | | | | automaticallyterminated if they are going against the |
| Pound/US Dollar (GBP/USD), US Dollar/Swiss Franc | | | | trader, therebyminimizing any loss of capital. |
| (USD/CHF),and US Dollar/Japanese Yen (USD/JPY). | | | | Success in trading the forex depends upon learning |
| Many traders,especially in the beginning, will choose to | | | | tobalance the risks and rewards inherent in this |
| settle on onecurrency pair such as the EUR/USD, and | | | | market. |
| focus on the nuancesof that one particular market. | | | | There are many, many tools available online to |
| After gaining some experienceand knowledge of | | | | accomplishthat goal, even for the beginning trader. |
| currency interactions, many traders eventuallygo on | | | | Overall, the dynamicsof the forex market make it a |
| to trade several currency pairs in order to | | | | very attractive investmentvehicle for the individual |
| increasetheir profit potential. | | | | investor, providing a uniqueprofit potential with a |
| As with other financial markets such as stocks or | | | | minimal investment of time andmoney. |