Finding Out About Currency Trading For Dummies

By Eddie Lamb

There are so many details that are important to know that an article this length cannot even begin to touch currency trading for dummies adequately. This is a broad brush stroke of some really basic information that will hopefully give you some ideas on further information that you need. Currency trading is most commonly known as Forex. Forex stands for Foreign Exchange Market. This market, unlike other stock markets, is open, active, and running twenty-four hours a day. The more that you can learn about Forex and the intricacies of trading, the more successful you will be.

Traders, or Currency traders, bet on the movement of exchange rates. Now, the movements of exchange rates are affected by many factors. First, the Forex really is about speculation. No trader, groups, etc., get information ahead of time that will indicate that a currency rate is going to change.

The most telling impact on currency in a country can be seen by the people of that country. Wars, arms, a death of major leaders, all affect the currency exchange rate. The global economy is affecting currency exchange rates around the world. Individuals who are speculating on when this currency will change direction have an opportunity to see significant gains in their portfolios or to lose substantially.

Traders try to predict fluctuations in the exchange rate and bet on the pairs that will give them the largest gains on their bet. When one country's currency is being traded against another country's currency, it is call a "pair". All of the major pairs that are traded involve the US dollar. When a currency pair is being traded that does not involve the US, it is called a "cross currency pair." An example of a cross currency pair would be EUR/JPY (Euro/Japanese Yen). The most actively traded cross currency pairs are the EUR, JPY, and the GBP (sterling pound or British currency).

If you though that the way that the currency is written and listed wasn't that important, think again. The stronger currency is traditionally shown on the left. When you see EUR/USD, it means that the Euro is stronger than the US dollar. The currency that is listed on the left is the "base currency." Whatever happens on the left creates the opposite action on the right. So, if you buy 100 EUR, you automatically sell 100 USD.

On paper it would look like this, 10000 EUR/USD. The currency on the right is called the "counter currency" or "secondary currency." The value of this currency when you buy or sell your base currency will determine what your profit or loss is on your trade.

Now, multiply the previous paragraphs into thousands of trades happening every minute of every day and you get an idea of how fast the market moves. Forex is very, very fast. The currency rates are constantly on the move. Some of the pairs are lower risk and some are extremely high risk. Knowing what the risk of the pairs are will help you to decide where you can start actively trading.

Now, this is only one tiny little piece of what you need to know to begin trading. There are strategies, methods, and much more that will be important in making successful trades on a consistent basis. It will be important to take some classes and talk to successful traders to learn about the different strategies and methods for trading that are effective. - 23217

About the Author:

If you need to create a little extra ready money trading currency, you will need to know a bit about forex signals and currency trading for dummies. Trade with self-confidence after you learn exceptional insider hints from the specialists!