What is Forex Market?
The word FOREX
is a combined word derived from Foreign+ Exchange. The Forex market or Foreign
Exchange market is the largest market in the world considering its financial
condition and value .. It is different from any kind of markets or business
institution which actually has no particular location, not even central
exchange. It uses an electronic network of banks, organizations and individuals
for trading one currency to another for the purpose of operating.
Who participate in Forex Market ?
* Central banks
of different country
Large commercial banks
* Multinational companies
* Mutual fund or
investment management firm
* Hedge firms
Look before you leap !!!!
Forex market is the
most liquid market and highly leveraged market. Leverage is most important
factor for speculators or retailers who do not intend for holding or receiving
delivery. Theoretically you can make your money double or triple within 10
minutes by using high leverage. For practical purpose you can practice a demo
account and take a position with 1:400 or 1: 1000 leverage. Your account will
be either zero or double within hours. However the purpose of trading is not to
risk your asset that much and thus need to learn trading theories and money
management. I asked a lot of people who do forex trading in very small scale
and aged below 40, why do they trade in forex? The maximum people answered that
its fun and easy.
irrationality must be removed and after setting up your mind for trading in the
Forex market, you must have a little trading concept. Before you trade using
real money, Understanding specific terms and learning what they mean are
essential for any kind of business. Complete awareness is obligatory for doing
any kind of investment. No business can be learned in shortcut procedure and
same goes for the Forex market. So if anyone thinks that he will learn business
and make huge profit in the Forex market overnight, than he is making a great
mistake. Some people may be benefited at first but all of them end up losing a
huge sum of their assets. This all happens because of the lacking of proper
knowledge and appropriate preparing.
Basic topics to learn for Forex trading
- Technical Analysis
- Money Management
Fundamentals of Forex
Fundamentals of Forex
is very vast.From fundamental point of view, currency valuation mainly depends
on below factors
There are other factors
as well but these data affect market regularly , Thus one need to know these
factors well to judge a country’s future economic prospective .
Technical’s Of Forex :
Technical analysis is
actually time series analysis and thus same to all market. It simply state the
demand and supply equilibrium. However dow theory , fibonnaci ratio , Elliot wave,
trend line, Moving averages, Bollinger bands, channels are some preliminary
idea which must be learned by everyone. I highly recommend everyone to study
the CMT level 1 syllabus everyone. All books are found online and they are
free. I do not say people will know a lot by reading them and this syllabus
ensure the foundation for technical analysis and money management.
Money Management :
The day one will forget
to breath that will be his last day living and simple the day a trader will
forget about money management in forex that might be his last day. So keep in
mind whatever you learn and earn can be wasted in blink of eyes. So money
management is must for everyone from the first day of trading life to the last day.