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Forex & Options Trading

Forex Introduction

What is Forex trading?

The Foreign Exchange Market is not a physical entity, there are no buildings like Stock Exchanges. It has some similarities to the Internet itself as transactions are carried out online between institutional and individual traders via brokers and banks with 'in-house' trading desks or floors. As the whole system is electronic, trades can also be automated and international currencies 'change hands' – at a daily rate of over 2 trillion dollars – 24 hours per day and 5.5 days per week, except for certain public holidays.

Forex 'trading hours' are not like a physical stock market or commodities exchange where people keep set business hours. Forex trades can take place between Sunday afternoon and Friday afternoon (US East Coast time) – and whatever that time equates to in any part of the world.

A 'new' day begins over the Pacific Ocean east of New Zealand, and follows the sun's path across Australia, Japan, Korea, China, Russia, Southeast Asia, India, the Gulf States, then Europe and Africa, the UK, across the Atlantic to the American east and three hours later west coast, once more reaching the Pacific. When the sun crosses the International Dateline another day begins for countries in the east.

The Forex market is most active during business hours in one or more of the world's largest financial trading centres of New York, London, Tokyo and Sydney. With other smaller but significant financial markets found all around the world it means that Forex trading is virtually continuous. Here is a chart that shows the main Forex trading 'sessions' with times in GMT (also known as UTC):

Forex trading sessions during 24 hours

What are a Forex trader's objectives?

The objective of Forex traders is to profit from buying then re-selling currencies of different countries. The Forex market trades in currency pairs like the British Pound and the US Dollar (shown as GBP/USD) or the US Dollar and the Japanese Yen (USD/JPY).

There are several major pairs that traders can choose from, as well as other currencies, market indices and precious metals. A currency 'lot' is purchased at the current (spot) market price and it can be re-sold at any time at a higher or lower price. The difference in value between the buying and selling price is measured in pips (one pip equals around $10). This then becomes the profit (or loss) on that trade, and the value is credited or debited to your account with the Forex broker who holds your trading account. A website like ceo-worldwide.com will provide you with the highest quality in the industry.

Forex trades take place when dealers or brokers can find 'matching' buyers and sellers on the international market, but in practice smaller trades are carried 'in house' by brokers who almost always have customers trading in both directions. Forex traders can be based anywhere there is access to the Internet – even lazing on a beach in the tropics, trading from a laptop computer with a wireless connection – and even from mobile phones! Many people including retirees all around the world have found Forex and options trading to be an interesting, mentally stimulating diversion and, with some experience, a significant extra income source.

How is Forex trading carried out?

Foreign currency trading is carried out using programs usually supplied free by Forex brokers or dealers who can be based anywhere around the world. An individual can open an account with one or more of these companies, and be given free training and the necessary facilities which enable him or her to monitor the market using on-line charts and other indicators, then make real-time transactions online. Anyone can apply online and get approved within the same day. It is not necessary to have high speed Internet access, but a reliable connection can be important while short term trades are running.

Forex day trading does not involve buying and selling actual currency; it's more like taking a temporary 'option' on it, for which you put up a small deposit. Most beginners start with a free demo account which does not require 'real' money at all. Find a broker with an easy-to-use Forex dealing desk. When you are ready, you can open a $50 (or more) 'live' trading account then start trading with the user-friendly interface or 'trading platform' as it is called. Want a team of experts who share their trade entry, stop loss, and profit targets so you can follow along and see EXACTLY what the risk/reward is? Wealth Generators forex allows anyone, anywhere to participate in the global currency forex market.
 
A small part of the money you deposit (also called account funding) in your brokerage account is used as collateral – like a guarantee for each trade while it is in progress. A trader may enter several trades simultaneously provided there are sufficient funds. When a trade is complete, the guarantee is returned to the account and the balance known as equity will reflect either profit or loss on the trade.

Forex trading is a popular method for creating wealth using the net – but you need to know what you are doing, otherwise you are likely to lose more than you make!

 

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