The three essentials to starting FX trading
The forex (FX) market is the largest and most liquid financial market in the world and is just as popular with governments, central banks, corporations as it is with individuals.
More and more private investors start trading forex each year and some make basic mistakes, here are a few key points to remember when you start.
What are currency pairs?
What lies at the heart of all forex trading is always the 'majors', which are: EUR/USD (Euro/US dollar), GBP/USD (Pound/US dollar), USD/JPY (US dollar/Yen), and USD/CAD (US Dollar/Canadian dollar).
While CAD/CHF (Canadian dollar/Swiss franc) and GBP/SGD (Pound/Singapore dollar) are examples of 'minor' forex pairs.
If you want to start forex trading it's recommended you choose a currency pair you are familiar with and learn everything you can about its relationship with other currencies.
The relationships between all currency pairs can be quite complicated so it's important that you learn as much as possible about your chosen pair.
Choose how you will access the markets
There are three main ways you can gain access to the forex markets. Currency futures are traded on the Chicago Mercantile Exchange (CME).
This used to be the only access point for private investors but with relatively large fixed contract size it's becoming less popular.
Another of these is margined forex trading accounts. These tend to be more attractive to retail forex traders as they offer the ability to trade on margin which is agreeable to the private individual who will have less capital than an institution.
Another way to access the forex markets is by spread betting, especially relevant to UK based forex customers. Spread betting is tax-free, is done on margin and has relatively small stake sizes.
Take your time choosing a provider and platform
As the forex market has increased in popularity with private individuals so has the number of companies offering forex products grown.
And that's one of the reasons it's important to choose a provider with has been around longer than average and one that provides a trading platform which is used to executing a high volume of trades.
Article Source: FxTradingStock.com
About the Author
See spread betting explained at IG Index's site. Where you can also find out all about forex and what it can do for you. Spread betting can result in losses as well as profits so make sure you understand the risks involved.
by: David Choice
Total views: 40
Word Count: 394
Date: Tue, 12 Apr 2011
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