FOREIGN EXCHANGE TRAINING FOR BEGINNERS

2007-03-08 10:33:40

( Financial )



Foreign exchange trading entails buying and selling currencies. Profits are made through buying a “higher value” currency as opposed to a “lower value” currency. If the bank forecasts that the US dollar will be higher in value as compared to the British Pound; thus, one can buy more US dollars.

A currency’s value depends on its relation with other currencies and industries’ confidence--- banks, governments, political climate of a country, and investors. If people in the country decide to revolt against their government, then investors will realize that their businesses are not stable, and therefore, pull out of the country, depreciating the currency.

In order to maximize the potential of foreign exchange trading, one must know the strengths and weaknesses of currencies. Factors such as how politically and economically stable the nation is, and are there many investors that keep the country afloat all contribute to the well-being of a currency.

In terms of market movement, analysts have turned to “Fibonacci Forecasting.” Numerical ratios derived from the mathematician Fibonacci are also being applied to currencies’ behavior. In predicting these patterns, one can know which currencies will gain the most value.

Any investor, from institutions such as banks to individuals interested in foreign exchange trading, can buy or sell currency. The market is open twenty-four hours, and investors have their pick of what day they decide to trade. Investors may also use online trading --using internet forecasts and webtools to buy and sell their currency of choice.

There are four types of investors: the fundamentals, who trade according to the principles of macro-economics; the technical traders, who base their decisions according to patterns and indicators in price charts; the trend-following or swing traders, who watch out for the latest trends in the market-- such as discount futures trading-- and follow them; and seasonal traders, who use the market’s behavior certain times of the year to their advantage.

No matter what type of investor you choose to be, it’s always wise to have a trading strategy. Never risk your whole account balance on any trade—your savings may be wiped out in case the currency’s strength becomes weak ( a surprise change in government, mob rule, investor pullout—all of these can happen in moments). If you start losing money five times in a row, stop trading and rethink your strategy. Emotional attachments to trading, or the desire to make a “killing” in a short span of time can hinder your gains. Instead, allow your money to grow steadily and consistently—and expect your gains to grow as much as ten percent in a month.


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