While there are many different types of markets out there for professional traders to try their hand at, there are few that get the attention and reputation of the Forex, and it’s not hard to see why. While stock markets and commodities talk about trading in the low billions in total assets in the range of $4 billion a day or $10 billion a day for commodities, the Forex market sees movements of trillions of dollars per day. That’s a massive difference, and because of the fact that leverage is used, individuals don’t need that much to move massively large amounts of money from one currency to another. And this is one of the main reasons that foreign currency trading online got so popular in the last 5 to 10 years.
Where Does Foreign Currency Trading Take Place?
All main foreign currency trading takes place in the Foreign Exchange, which is shortened to Forex, which is how much traders are going to refer to the markets. The Forex is open all week long since they are open 24 hours a day with each currency until that country’s markets completely close: usually on Sunday. Because of the difference in time zones, there’s always major currencies that are heavily active and during the weekdays all currencies are still available to trade during all hours.
All traders need to use trading online software to connect with the markets and make their trades online from there.
How Does Leverage Work?
Leverage is one of the most important parts of foreign currency trading works. Generally speaking, $1 controls $50, $100, or even $200 of currency. The 100:1 ratio is by far and away the most common. This means that putting up $1,000 allows a trader to trade $100,000 worth of currency. The good news is that this means when a currency pair goes up as little as .001 or .0001 cents, that actually is a huge jump because you’re collecting that off of 100K.
The downside of trading online with currencies is that if a currency pair suddenly changes .009 against your position, you can lose a lot of your $1,000 position because that is leveraged back against you, as well.
Learn About the Major Currency Pairs And Trading Online
If you are going to be trading online with XTrade, then you need to make sure that you understand currency pairs. There are eight major currencies that can be traded against one another, and you want to know the important fundamental reports that most strongly affect each of these individual currencies. Copper prices for the Australian Dollar, the gold prices affecting the United States Dollar, or many others. CAD tends to be somewhat tied to the USD just like the NZD is tied to the AUD. When you look at each currency you will see how much there is to learn.
Make sure you understand: USD, CAD, GBP, EUR, CHF, AUD, NZD, & JPY. These are the major currencies and you need to know those reports.
When it comes to foreign currency trading, the most important thing to understand is that while this market gives more opportunity for massive profits than any other market in the entire world, you need to know your stuff before proceeding.