There are three different types of currency trading; Forex, foreign exchange and fx. These types of currency trading involve exchanging one currency for another. The aim is to make profit when the exchange rates change. The exchange rates constantly change due to world events and changes in the stock exchange, so there is always money to be made on a daily basis.
A good example of this is if someone exchanges US dollars for British pounds. If you changed $ 100 right now, you'd likely get £ 65. Then if you wait a few days for the exchange rate to change in your favor, you could potentially exchange that £ 65 for $ 102. So, you would have made a $ 2 profit, or 2% of your investment.
Experienced currency traders do this sort of thing, day in, day out, hoping that they boost their bank balances through a number of small trades. Typically, the experienced traders will trade on margins so they can control the large amounts with only a small investment on their part. From the above example, you would only have to hold about $ 10 in your brokerage account to make the purchase. Even though you are $ 90 short as the amount is $ 100. Your broker will usually cover the rest of the money, if they can assume that the market is not going to change by more than 10% in a short period of time.
It's likely that you've only just recently found out about forex trading, and that's because it only became an available option to the public when the Internet was invented. Forex trading has been going on for 30 years or so, but before the Internet only banks and other rich institutions traded. But these days, regular people like you and me can trade thanks to the power of the Internet. The banks are still the major players in the game though. Around $ 4 trillion dollars changes hands every day in currency trading, but only a small part of that belongs to us, regular individuals.
You can make a currency trade at almost any time of the day or night, due to foreign exchange being a worldwide market. For example, in Australia they open up the market first every single day, and when that market closes for the day, the New York one opens up. So for 5 days a week foreign exchange is definitely a 24 hour market.
Many new traders believe that they are limited to dealing in their own currency, but that's not the case at all. If your local economy is in an unpredictable state, you can choose to trade different currencies that are more stable. Sometimes dealing with treaties that are unstable can be very rewarding, but it's also very risky. So stick to the stable treaties that are not volatile.
You can get started as a trader today with just a few hundred dollars, there are brokers out there that will allow you to do this by providing you with a special software that allows you to make trades on your account.
You should know that foreign exchange is a high liquidity market, meaning that the money you invest will not be tied up for long periods of time unlike other stock investments. That's one of the main attractions of trading currencies.
If you have the funds and you're ready to start trading currency you need to possess a few tools that are vital to succeeding with forex. You need good money management skills, self discipline and a profitable system that you need to follow. A decent forex robot to apply your profitable system could be beneficial to you too! Once you possess these skills, and you have the money to invest you can be come quite a successful currency trader.
Source by Jay Robert Edwards