Learning To Trade Forex

The foreign exchange (forex) market is a strange beast when first encountered. Its roars send central bankers scurrying for their interest rate levers and printing presses. Its howls send stock and bond markets reeling upwards or downwards as they suddenly find themselves worth more or less. The forex market is the largest and most liquid financial market in the world. The equivalent of trillions of U.S. dollars flow in and out of the market on a daily basis. This gargantuan turnover is focused on only a few currencies out of the 165 in existence. These currencies are called the major currencies: the U.S. dollar, the Japanese yen, the euro, the Canadian dollar, the Australian dollar, the Swiss franc and the British pound.

Participants in the forex market include multinational corporations, central banks, foreign governments, international financial institutions and speculators, both professionals and amateurs. Central banks intervene in the forex market to support their monetary policy objectives. Foreign governments build up foreign exchange reserves using other nations’ currencies. Speculators buy and sell currencies in attempts to profit off of their movements. For beginning speculators, the forex market is an entirely new world, vast, bewildering, almost impenetrable.

Nevertheless, it is possible to take to the waves and successfully navigate the world of forex with the right training. A lot of information has to be assimilated and comprehended in order to understand what currency moves mean. In addition to specific price points and targets, there are fundamentals to take into account. Interest rates, inflation rates, Gross Domestic Product (GDP) growth rates and other economic indicators play a large role in currency valuation. Higher interest rates means a currency is more valuable to traders, particularly those executing a carry trade, which sells a low-rate currency and buys a high-rate currency, profiting off of the difference between them.

The forex market is a global network of dealers that trades claims on currency deposits in foreign and domestic banking systems. Very little actual exchanging of currencies takes place, except in the case of a tourist trying to get their hands on some spending money. The forex market changes extremely rapidly in response to geopolitical events, economic shifts and natural disasters among other things. Traders usually stick to the major currency pairs, specifically pairs involving the U.S. dollar. The dollar is the world’s reserve currency, and it is used everywhere. The liquidity of dollar pairs is something traders can count on.

In the final analysis, success or failure in this market is due to the trader’s own self-discipline. The forex market is ruthless, punishing anyone who is too emotional or unwilling to take small losses. A position can quickly lose money, and traders who do not adapt will be wiped out.

Learning to trade forex does not have to be hard. New traders must be merely patient and willing to absorb the required information necessary for successful trades. Lucror FX can help newcomers learn the ropes and stay on their feet. Contact them at www.lucrorfx.com for more information.


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