Foreign Exchange Trading, High Risk And Reward
Definition- Foreign exchange trading also known as FX or Forex, is defined as the trading of one currency in exchange for another. The foreign exchange market is the biggest, most lucrative and liquid market on earth, trading 24 hours a day, 7 days per week. Up to US$1.5 trillion dollars worth of trades are conducted everyday. Central Banks, Corporations, Individuals and speculators form part of the forex participant base. 5 % of daily volumes consist of Government and commercial currency conversions, the other 95% is made up of speculation and trading.
Pro's- The pro's to foreign exchange trading are incredible including immense liquidity, non-stop trading due to overlapping trade sessions, traders can take advantage of market, economical and political events by imminently trading in accordance, very low transaction cost and margin trade opportunities.
Risk- It is very important to understand the risk involved with foreign exchange trading. The rewards are high but the risk is just as significant. If you plan to trade with capital you are unwilling to loose you are going to encounter pretty big problems should the market turn on you with the possibility of losing both initial investment and profits. Make sure that you know all there is to know about the trade type as there are many tricks, tips and pitfalls you can encounter along the way, requiring immediate handling of the situation. If you feel even the slightly uncertain- avoid trading and the market as a whole. Take a course in foreign exchange trading to make sure that you understand the market thoroughly before attempting trade.
Spot and rollover's- Forex is normally traded on spot, meaning that trades are completed on at spot rate and settled within 2 business days. However, rollovers may sometimes occur where positions remain open and roll-over onto the next settlement day, expire and settle at next rate.
Quoting- Quoting refers to the bid and asking price for the currency pair. The bid price is usually on left hand side and asking price on the right hand when indicated. - 23218
Pro's- The pro's to foreign exchange trading are incredible including immense liquidity, non-stop trading due to overlapping trade sessions, traders can take advantage of market, economical and political events by imminently trading in accordance, very low transaction cost and margin trade opportunities.
Risk- It is very important to understand the risk involved with foreign exchange trading. The rewards are high but the risk is just as significant. If you plan to trade with capital you are unwilling to loose you are going to encounter pretty big problems should the market turn on you with the possibility of losing both initial investment and profits. Make sure that you know all there is to know about the trade type as there are many tricks, tips and pitfalls you can encounter along the way, requiring immediate handling of the situation. If you feel even the slightly uncertain- avoid trading and the market as a whole. Take a course in foreign exchange trading to make sure that you understand the market thoroughly before attempting trade.
Spot and rollover's- Forex is normally traded on spot, meaning that trades are completed on at spot rate and settled within 2 business days. However, rollovers may sometimes occur where positions remain open and roll-over onto the next settlement day, expire and settle at next rate.
Quoting- Quoting refers to the bid and asking price for the currency pair. The bid price is usually on left hand side and asking price on the right hand when indicated. - 23218
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posted by X - Men @ 4:48 AM
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