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Trading foreign exchange on the currency market, also called trading forex, can be a thrilling hobby and a great source of income. To put it into perspective, the securities market trades about $22.4 billion per day; the forex market trades about $5 trillion per day. You can trade forex online in multiple ways.

The type of currency you are spending, or getting rid of, is the

The currency that you are purchasing is called

In forex trading, you sell one currency to purchase another.

tells you how much you have to spend in quote currency to purchase base currency.

position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U.S. dollars to purchase British pounds.

position means that you want to buy quote currency and sell base currency. In other words, you would sell British pounds and purchase U.S. dollars.

price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to

price, or the offer price, is the price at which your broker will sell base currency in exchange for quote currency. The

price is the best available price at which you are willing to buy from the market.

is the difference between the bid price and the ask price.

Youll see two numbers on a forex quote: the bid price on the left and the ask price on the right.

Decide what currency you want to buy and sell.

Make predictions about the economy. If you believe that the U.S. economy will continue to weaken, which is bad for the U.S. dollar, then you probably want to sell dollars in exchange for a currency from a country where the economy is strong.

Look at a countrys trading position. If a country has many goods that are in demand, then the country will likely export many goods to make money. This trading advantage will boost the countrys economy, thus boosting the value of its currency.

Consider politics. If a country is having an election, then the countrys currency will appreciate if the winner of the election has a fiscally responsible agenda. Also, if the government of a country loosens regulations for economic growth, the currency is likely to increase in value.

Read economic reports. Reports on a countrys GDP, for instance, or reports about other economic factors like employment and inflation, will have an effect on the value of the countrys currency.

measures the change in value between two currencies. Usually, one pip equals 0.0001 of a change in value. For example, if your EUR/USD trade moves from 1.546 to 1.547, your currency value has increased by ten pips.

Multiply the number of pips that your account has changed by the exchange rate. This calculation will tell you how much your account has increased or decreased in value.

Take these factors into consideration when choosing your brokerage:

Look for someone who has been in the industry for ten years or more. Experience indicates that the company knows what its doing and knows how to take care of clients.

Check to see that the brokerage is regulated by a major oversight body. If your broker voluntarily submits to government oversight, then you can feel reassured about your brokers honesty and transparency. Some oversight bodies include:

United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)

United Kingdom: Financial Conduct Authority (FCA)

Australia: Australian Securities and Investment Commission (ASIC)

Switzerland: Swiss Federal Banking Commission (SFBC)

Germany: Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFIN)

France: Autorit des Marchs Financiers (AMF)

See how many products the broker offers. If the broker also trades securities and commodities, for instance, then you know that the broker has a bigger client base and a wider business reach.

Read reviews but be careful. Sometimes unscrupulous brokers will go into review sites and write reviews to boost their own reputations. Reviews can give you a flavor for a broker, but you should always take them with a grain of salt.

Visit the brokers website. It should look professional, and links should be active. If the website says something like Coming Soon! or otherwise looks unprofessional, then steer clear of that broker.

Check on transaction costs for each trade. You should also check to see how much your bank will charge to wire money into your forex account.

Focus on the essentials. You need good customer support, easy transactions and transparency. You should also gravitate toward brokers who have a good reputation.

Request information about opening an account.

You can open a personal account or you can choose a managed account. With a personal account, you can execute your own trades. With a managed account, your broker will execute trades for you.

You can ask for the paperwork by mail or download it, usually in the form of a PDF file. Make sure to check the costs of transferring cash from your bank account into your brokerage account. The fees will cut into your profits.

Usually the broker will send you an email containing a link to activate your account. Click the link and follow the instructions to get started with trading.

Technical analysis involves reviewing charts or historical data to predict how the currency will move based on past events. You can usually obtain charts from your broker or use a popular platform like Metatrader 4.

This type of analysis involves looking at a countrys economic fundamentals and using this information to influence your trading decisions.

This kind of analysis is largely subjective. Essentially you try to analyze the mood of the market to figure out if its bearish or bullish. While you cant always put your finger on market sentiment, you can often make a good guess that can influence your trades.

Depending on your brokers policies, you can invest a little bit of money but still make big trades.

For example, if you want to trade 100,000 units at a margin of one percent, your broker will require you to put $1,000 cash in an account as security.

Your gains and losses will either add to the account or deduct from its value. For this reason, a good general rule is to invest only two percent of your cash in a particular currency pair.

With a market order, you instruct your broker to execute your buy/sell at the current market rate.

These orders instruct your broker to execute a trade at a specific price. For instance, you can buy currency when it reaches a certain price or sell currency if it lowers to a particular price.

A stop order is a choice to buy currency above the current market price (in anticipation that its value will increase) or to sell currency below the current market price to cut your losses.

Above all, dont get emotional. The forex market is volatile, and you will see a lot of ups and downs. What matters is to continue doing your research and sticking with your strategy. Eventually you will see profits.

No. The brokers are the ones with the pricing, and execute the trades. However, you can get free demo accounts to practice and learn platforms.

Were talking here about using one national currency to purchase some other national currency and trying to do so at an advantageous exchange rate so that later one can sell the currency at a profit.

Not unless you really know what youre doing. For most people, Forex trading would amount to gambling. If you can find an experienced trader to take you under his wing, you might be able to learn enough to succeed. There is big money to be made in Forex, but you could easily lose your whole stake, too.

How much capital does one needs to have to start trading?

Its common to begin with several thousand dollars, but its possible to start with just a few hundred dollars.

Can an unemployed person depend on Forex trading?

Forex trading is not easy, even for experienced traders. Dont rely on it for income until you know what youre doing.

During the process of opening a trading account, electronically transfer money to it from your bank account. The broker will tell you the minimum amount with which you can open an account.

For an inexperienced trader, yes, its gambling. Even experienced traders sometimes have to rely on luck, because there are so many variables at play.

According to your knowledge on forex, what are the 2 currencies that will make me a good profit in any case?

In forex there are no guarantees. Generally speaking, no currency pair can offer a novice a guaranteed profit. Successful traders are simply good at recognizing economic and political conditions that lead to increasing or decreasing currency values.

Is it safe to start trading without knowledge?

Absolutely not. If you dont want to do the work to educate yourself, hire a full-service broker to do the thinking for you.

Is it compulsory to open an account at a specific bank?

No. Your trading account will be at a brokerage, but you can link it to whatever bank account you choose.

Research about broker and know how much does he make per annum?

Include your email address to get a message when this question is answered.

Try to focus on using only about 2% of your total cash. For example, if you decide to invest $1000, try to use only $20 to invest in a currency pair. The prices in Forex are extremely volatile, and you want to make sure you have enough money to cover the down side.

Start trading forex with a demo account before you invest real capital. That way you can get a feel for the process and decide if trading forex is for you. When youre consistently making good trades on demo, then you can go live with a real forex account.

Limit your losses. Lets say that you invested $20 in EUR/USD, and today your total losses are $5. You wouldnt have lost money. It is important to use only about 2% of your funds per trade, combining the stop-loss order with that 2%. Having enough capital to cover the downside will allow you to keep your position open and see profits.

Remember that losses arent losses unless your position is closed. If your position is still open, your losses will only count if you choose to close the order and take the losses.

If your currency pair goes against you, and you dont have enough money to cover the duration, you will automatically be canceled out of your order. Make sure you dont make this mistake.

Check to make sure that your broker has a physical address. If a broker doesnt offer an address, then you should look for someone else to avoid being scammed.

Ninety percent of day traders are unsuccessful. If you want to learn common pitfalls which will cause you to make bad trades, consult a trusted money manager.

To trade forex, choose a brokerage that is regulated by a major oversight body like National Futures Association (NFA) or Financial Conduct Authority (FCA) and open an account. Read and analyze international economic reports, then choose a currency you feel is economically sound to trade with, like the US dollar or Euro. Start placing orders through your broker based on your research findings, then watch your account to monitor your profits and losses.To learn how to analyze the market and set your trade margins, keep reading!

This article was co-authored by our trained team of editors and researchers who validated it for accuracy and comprehensiveness. Together, they cited information from6 references. wikiHowsContent Management Teamcarefully monitors the work from our editorial staff to ensure that each article meets our high standards.

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