Forex stands for foreign exchange market. It’s a market where currencies are exchanged. Initially trading in forex was limited to banks and large investment firms only. But now with the rise of electronic age even a small trader can take the benefits of this huge financial market. Forex market is larger than all other financial markets combined together. It’s so large that often a single day trade crosses the two trillion dollar mark. Due to such large flow of money only national economies are responsible for any change in the value of the currency. Therefore, it is much more stable than any other financial market including the stock market.
A few of the major currencies that are traded in forex market are dollar, pound, yen and euro. The concept of the forex market is same as that of the stock market. You buy one currency when its value is low in terms of other currency and sell that currency when its value rises. Thus currencies are traded in pairs. Forex market is active for 24 hours due to the difference in time zones.
Forex trading is not at all a difficult thing to do. Facts show that 95% of new traders lose money in forex trading. This is because either they don’t have the right approach or they have got the wrong forex education. In forex trading, the market does not do harm to anyone it’s the trader who harms himself. Anyone can learn the basics of forex trading because in forex market you get rewarded for being correct and not for the hard work or effort you put in. There are some simple points to keep in mind while trading in forex:
-Always follow the trend – Most of the traders commit this mistake of anticipating the next move of the market. You should not spend your lives on predicting where the market will head. Instead, just try to follow the existing trend by jumping in and out of the positions.
-Be prepared to face losses – Because losing is a part of winning.
-Always form a trading plan – Make your trading plans and stick to them. If the trend crosses your set limits, it’s always better to quit then repent later on. It takes a lot of discipline to be a successful forex trader. Because if you cannot maintain discipline then your emotions will start affecting your decisions.
-Never be of a double mind – Be prompt in your decisions. Sell when it needs to be sold and buy when it needs to be bought.