Archives: 2008 May

The words forex trading can be really intimidating but interesting when you first hear them. And who would not at least slightly intimidated? Foreign exchange can sound complicated with the conversion from one currency to another swimming in your mind.

When you really stop to think about it, however, forex trading is like any buy and sell business that involves money and the exchange of goods. The only difference is, instead of exchanging ordinary things that you buy and sell such as food or used cars, you are buying and selling foreign currencies.

Forex trading or what is frequently called FX refers to the business that involves the trading of currencies from different nations. For instance, if you bought a euro and sold it to a friend, you are in a way doing FX trading. For it to be really called trading, you need to have the purpose of making money out of the foreign currency that you bought by selling it when the conversion to another currency is higher that at the time that you bought the currency.

Foreign exchange is a huge global business. Every day, some 3 trillion dollars are being traded, bought, sold and then bought again. What is great about this global business though is the fact that you don’t have to go to other parts of the world to do this business. You can do it while staying in just one country. With the use of the Internet you can even do forex trading right in the comfort of your own home.

You really should not trade forex until you have completed at least a mini forex trading course. There are a lot of online forex trading resources which are readily available. Many of them are offered free along with demo forex trading accounts.

Forex trading or foreign exchange trading is a type of trading using the different currencies of the world. This type of trade takes place in the Forex market, known to be the largest financial market in the world. Over three trillion US dollars are being traded in this important active market on a daily basis. The forex market is also the most liquid of the world’s many trading markets.

The forex or currency exchange market deals with the simultaneous selling or buying of different currencies in the world. It can be buying or selling a currency in exchange for another currency at an agreed rate. Trading in currencies usually takes place between two counterpartys. It can be as simple as making a trade over the phone, via the Internet, or through electronic networks connected all over the world like the Reuters dealing system.

Forex trading, unlike trading on the stock market is not conducted by way of a central exchange. Trading of currencies usually takes place on the interbank market which operates like an over the counter market. There are main centers where currency trading operates. They are located in the cities of Sydney, London, Frankfurt, Tokyo, Hong Kong, and New York. This distribution of trading centers that covers the important regions of the world makes it possible for currencies to be traded in the forex market for a 24-hour period.

All of us dream about the potential of working at home make trades through the internet a few hours a day and making enough money to quit our day job. In all actuality this is quite feasible for any one of us who is determined to be successful in trading in the Forex market.

I want to give you a little bit of advice before you jump in and start trading in the Forex market. I think that this advice will prove to be very valuable to you in the long run. I know that I wish I would have listened to this advice before my first investment. I would probably be a whole lot richer today then I really am.

The greatest investment that anyone can invest in is our brain. That’s right, in our education and knowledge that we have as an investor. Books are cheap, many times free. Most of us also have “free time” that we can spend to read these books. So, why don’t we do more reading before we start investing?

Emotion is definitely one aspect that causes us to jump right into investing without first studying and preparing for that investment. We read articles, and testimonials of people making so much money without doing anything that we think we are going to be that profitable as well. This isn’t always true. But we can see ourselves driving that new car that we bought from our investment earnings and we just can’t wait. Emotion is a very dangerous thing in the world of investing.

How long will new found strength in the US Dollar continue? To venture a guess I would say perhaps longer than you would reasonably expect looking at the condition of the US economy and the price of crude oil.

The Dollar has put in a strong performance this week as bad news about the US economy was not as bad as the market expected. The Euro traded as high as 158.20 as recently as Monday, May 27 (US markets closed for Memorial Day) and is trading down to 1.5490 as I write on Wednesday.

The dollar has also put in a good effort against the Yen, trading up from lows of 103.25 to highs of 105.86 so far today.

A little better than expected show of growth in the US economy and the apparent end of the Fed cutting interest rates seems to be behind the Dollars strength this week. The US GDP growth figure for the first quarter of 2008 was revised from up 0.06% to 0.09%. Recent comments from Fed governors suggest that the Fed is becoming increasingly concerned about an increases in the US inflation rate and that further interest rate cuts may not be forth coming at the June Fed meeting.

The Dollar cleared resistance with the Yen at about 105.45 this morning and seems to be good to go to 106.50 or so on this move. A breakout above 106.50 could clear to way for the Dollar to push towards 110.00.