In the world, trading foreign exchange comes mainly from two sources:
about 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country and convert the profits made in foreign currencies into their domestic currency;
the remaining 95% is the result of speculation: most traders focus on currencies that have the highest degree of liquidity, called "the main currencies."
Specifically, over 85% of the daily operations Forex regards the main currencies, namely the U.S. dollar, Japanese yen, the euro, British pound, Swiss franc, Canadian dollar and Australian dollar.
The largest market in the world, accessible 24h/24
Unlike other financial markets, the foreign exchange market has no physical location or central square: it is an OTC market where buyers and sellers (banks, companies, private investors etc..) doing business.
Trading the Forex market in real time 24h/24, start every morning in Sydney. Then follows the opening of financial markets around the world, first to Tokyo, then London and New York. Unlike other financial markets, investors can respond to currency fluctuations caused by economic events, social and political as soon as they occur, day or night. The extreme liquidity and the ongoing global activity make forex the ideal market for active investors.
Why trade on the Forex market? An open market
24h/24
The Forex market is a continuously running 24h/24. You have the opportunity to negotiate during the hours of U.S. markets, Asia, Europe etc.. with the advantage of choosing when you want to run your operations.
Benefits interesting
Speculating on currency offers a range of attractive benefits. Among them, here are some for which traders choose this market: No fees
Of all the markets, the Forex is that it costs less, there are no fees on transactions carried out. Traders online only pocket the spread (the difference between the sale price and the purchase).
Leverage
You can get up to a lever 100, which allows you to take positions more than the capital invested.
Warning: the leverage should be used with extreme caution because if it's true that can be ten times earnings, can also cause significant losses in the event of adverse market fluctuations ...
No one can affect the market
The foreign exchange market is so big and so many participants that no financial group or entity (central bank) can determine the market price. Forex no OPA.
opportunity to learn without risk
You have a model free accounts with which you can practice and try your techniques without investing real money. This allows you to learn without charge and without risk.
The leverage in the Forex (in English "leverage")
is very different from that of other types of trading or investment. When you use the leverage effect, you borrow on margin to increase the amount transaction exceeds the available funds in the account.
in stock market transactions, for example, you can leverage your account for twice the value of your purchase. Forex, in most cases amounts to be negotiated ten to four hundred times the capital they have.
Since the market is very liquid, there is almost no reason to ever have to worry about money if the market goes wrong. The guidelines cover the margin were designed to initiate the request for a margin requirement on your account long before there is a possibility of negative balance.
For example, with a leverage of 100:1, you can make a transaction for a value of one hundred times higher than what you have on account: If you have a thousand dollars, you can perform a transaction for a hundred thousand dollars.
is important to go careful with leverage effect: to avoid unpleasant surprises, you must take discipline in the management of your capital. It is recommended that a position that it never uses more than ten percent of the available margin, just to protect against market fluctuations.
Do not forget that you invest in Forex to earn money and not to be missed!
Technical analysis and fundamental analysis, two investment strategies
The two basic investment strategies in Forex technical analysis and fundamental analysis.
Technical analysis assumes that all the information on future movements of the market and a particular currency are in the price chain. All the factors that have an effect on prices has already considered and reflected in prices themselves. In those circumstances, the investor bases its investments on three key assumptions:
market movements incorporate all relevant factors;
the price trend is reflected and is directly related to these events;
history repeats itself.
People who use technical analysis looks at the highest prices and lowest of a currency, the prices of opening and closing and the volume of transactions, in other words, looks just as evolved in recent times and provides this uniform that small fluctuations in general will continue as before.
Fundamental analysis takes into account the current situation in the country of the currency, including factors like the economy, the political situation and other elements of this type.
An investor may also provide for quotas of less quantifiable factors, such as the political context, they also have an influence on the market. It is also important to remember that the traders should keep in mind the hopes and expectations of market participants before all predictions based only on those factors.
Similarly, as with any stock market, the value of a currency is also based on perceptions and expectations concerning them and not only on the facts.
Place your orders well
When placing an order it is important to get it right, that is, you have to place it according to your trading style. The orders given incorrectly can distort your points of entry and exit. Here is a list of different types of orders: market order
is the most common type of order. A market order is used when you want to place an order immediately, the market price, which corresponds to the order or the asking price appearing on your screen.
Stop order
A stop order is an order that becomes a market order only after it has reached the price quoted. It can be used to underwrite a new position or to exit an existing position.
A buy-stop order, as its name indicates, is the instruction to buy currency at the market price once the market has reached the maximum price or the one you mentioned, which is higher than the market price current. A sell-stop order is instead instructed to sell the currency at the market price after the market has reached the minimum price or the one you mentioned, which is lower than the current market price.
stop orders are used to limit your losses.
The limit order Limit order is given only when you are willing to sign a new position or exit from an existing position at a specified price or better. The order is executed only if the market reaches that price or a higher price.
buy limit order is education instead of buying foreign exchange at market price after the market has reached the price you set, or a lower price than the current one. The sell limit order is an instruction to buy foreign exchange at market price after the market has reached the price you set, or a higher price than the current one.
limit orders are used to define your goals of profit.
Conclusion
follow orders correctly and have a good understanding of the different types of orders will allow you to use the right tools to achieve your goals.
Despite the existence of others, market orders, stop orders and those limitations are more common. Use them with adequate knowledge of the facts to place your orders.
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