The Forex market is an important resource for businesses and individuals doing business in foreign countries. Through experienced foreign currency exchange trading, traders can amass large profits in speculative portfolios or hedge business transactions in foreign currencies.
So what is Forex anyway?
The foreign currency exchange, unlike other stock or commodity markets, is decentralized and based largely on an electronic network of banks and brokers around the globe. Forex is in operation 24 hours a day from Sunday night to Friday 5:00 PM ET. Trading opens in Syndey, Australia, and moves around the world to Tokyo, London, and New York. Trades in the most popular currency pairs, called the Majors are typically extremely liquid. When macroeconomic news happens, the currency market is there to adjust.
Forex trading and leverage
Forex Currency Trading is a highly leveraged form of trading. Leverage can work in the favor of the trad
er in that you don’t need a lot of capital to begin trading large sums of money. However, with high leverage comes substantial risk; it is possible in some types of Forex accounts to lose more money than you put in the account.
Forex Risk Controls
For traders who use leveraged speculative vehicles like Forex, it is of crucial importance to develop a clear strategy for risk control to avoid catastrophic loss of capital. This is because tiny movements in currency values, down to five decimal places or more, can be leveraged into profits of large dollar amounts. However, this is only possible by limiting position size and using stops.
Opening a Forex Trading Account
You can open a currency trading account for as little as $250, however most experts suggest that you deposit a much larger amount than that to make risk control easier to achieve. There are some very good Forex currency trading Introducing Brokers that have good trading platforms.