They will buy the currency that they believe will rise in value or sell the currency that they believe will fall in value. The currency value is determined by the economic conditions in the economy of a country. A FOREX trader can make money whether an economy is having difficulties or whether an economy is doing well because of the fact that he can buy or sell the currency.
FOREX trades are done in pairs, so a trader will buy Japanese yen and the British pound. What is a trader buying when he buys currency? He is essentially buying a piece of the country's economy. The FOREX market is the largest trading market in the world. It trades of two trillion dollars each day, and that is a lot of money!
THE FOREX market is open twenty four hours a day. It never closes, so it is an attractive investment choice for those who wish to dabble in FOREX on a part-time basis. Opening up a trading account is easy. Most brokerage firms require a $ 1,000 deposit, but you may be able to find some that will let you open a micro account for $ 300.
Another reason that traders enjoy the FOREX market is because it is such a liquid market. FOREX is all about trading currencies and because it is so large, no one can corner the market and control market prices for a long period of time.
The best thing for those who want to test their knowledge in the FOREX market, but are afraid to lose money, is to set up a demonstration account. Almost every online FOREX brokerage house provides this option for its clients. The demo account allows you to practice trading FOREX and gives you access to the news and charts that you would need to make your trading decisions. You can track how much money you have gained and lost without it affecting your bank account. It is an excellent way to break into FOREX.
There are many software packages for sale that purport to help you make profits on FOREX. The software program will analyze the market and will try to find you trades that will be profitable for your investment. All you need to do is accept or decline the trade. The software can save you time by doing some of the research for you, but you are extremely responsible for what happens to the trade. Many traders swear by these software packages, but it is your decision whether or not you wish to use this help.
FOREX is a volatile market, which offers the most opportunities to make a profit, so while there is money to be made, it can also be lost. Be aware that political issues have great impacts on the FOREX market. I suggest opening a demo account to see if FOREX is the right place for you to make some money.
Source by Mark Crisp