Friday, July 10, 2009

Forex trading system

Forex trading system: Forex market is an international exchange market where some currencies are bought and the others are sold accordingly. Trading in Forex market goes in currency pairs like EUR/USD for Euro/US Dollar of USD/JPY for US Dollar/Japanese Yen and it is unlikely to have any external controls.

The transactions between the counterparts of Forex market are carried out via electronic network or over the phone. That's why Forex market is known as an "interbank" market. There is not any trading center for FX market unlike futures and stock markets.

The borrowed capital is often used for trading in Forex. In this case currency speculations are carried out through getting a credit line and called marginal trading. This fact confirms that you can trade in Forex without being supplied by any real money. So, the trader may deal with large transactions at a high speed and low fee without having a considerable initial capital.

Forex has two fundamental trading strategies: Fundamental and Technical Analysis. The sense of technical analysis is to invest money after studying past data with hope that the history would behave cyclically. Fundamental analysis deals with analyzing various different fundamental factors within the country, like economical and political situation hoping that they will affect exchange rates.
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Only national banks, multi-national corporations and other large players used to have an unlimited access to foreign exchange recently. 1980's gave birth to new rules that have established margin accounts making participation possible even for small investors. Forex has gained its popularity thanks to margin accounts. Having a $1,000 investment and 100:1 margin accounts you get an access to $100,000 funds.

A reputable broker is usually required for Forex traders to carry out their transactions. CFTC (the Commodity Futures Trading Commission) registers such reputable broker as FCM (a Futures Commission Merchant). Lots of beginner traders often make 2 following mistakes: starting their trading without having a strategy and trading lead by emotions. It happens when you, having just bought and watching the rate decline, start panic and rapidly sell just to see the following market growth. Be sure to lose your money trading like this. Profitable Forex trader has an adequate strategy and doesn't let his emotions deal with trading.

Forex trader requires good education concerning movements of the market as well as different kinds of orders to carry out his trade with maximum profit and minimum risk.

Understanding the market along with the forces affecting it is the first step to becoming a successful trader. You can base trading strategies on this knowledge for successful usage in your trading.

Forex has 5 most important groups participating in the trades: Banks, Governments, Corporations, Investment Funds, and traders. Traders are the only group that doesn't have an external control having only themselves to report to. A margin agreement, conducted during establishing Forex account includes the statement that any trades which the broker considers too risky may be interfered by him. You may start your trading after establishing your Forex account.

There are various kinds of accounts offered by brokers. Standard deposit depends on the broker but is generally from $1000 to $2000 however there are mini accounts that let you in having only $200. Leverage can also be different. You get an access to higher amount of money with higher leverage possessing the same investment.

You can find out how various software tools and the system in general work by using demo accounts. They are strongly recommended to be used for every newbie Forex investor.

There are some tools that are common to all brokers despite each broker has its own software. These common tools that you can expect to see practically in any broker's software are: news feeds, real time quotes, technical analyses and charts, analyses of profit and loss.

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