Do you want to be a forex trader who earn a living by trading currencies? If so, there are several basic things you need to know. You may be already familiar with buying and selling foreign currencies to some extent. But nothing is wrong if you dig more information about forex trading. After all there may be something you forget or have not known.
First, you should know that forex can be considered as the largest exchange on this globe. The commodities traded are very liquid which means that it will never be hard to sell a currency in your hand.
In addition to that, you will always be able to trade foreign currencies twenty-four hours a day. The markets always open. Thanks to the time differences between countries.
Similar to the stocks market, bid and ask prices are employed to trade currencies. The difference is that in forex trading a currency is always paired against another currency, like dollar against yen. Furthermore, currencies are showed in pips. This is intended for simplicity purpose.
A very attractive feature of forex trading is that it allows traders to leverage their position. However keep in mind that besides enabling you to gain significant profits it can also translate into huge losses.
Although generally you can always exchange all kinds of currencies, the most traded ones are dollar, euro, yen, pound and franc. This simply means you should keep up with the factors that affect these majors.
If stock investing requires you to monitor the performance of the company you intend to invest in, in forex trading what you need to monitor is the circumstances like the political and economy conditions of certain countries.
In the end, like how you should treat any other trading markets, you should also need to have certain skills to engage in forex trading. Consider to take some practices by utilizing the forex simulation program provided by a reputable brokerage.