Forex 101- What You Need To Know Before Trading

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Although Forex is not known by many people, Forex markets can be found in most countries around the world, as currency trading is not limited to a couple of countries anymore, it’s actually a global activity. A very rewarding global activity that happens all around us every day. No matter where in the world any of us live, we all use money, and to be able to trade with others who may not use the same currency as ours, we need to exchange currencies. And with a little twist, currency trading can be one of the fastest ways to make money online.

Forex may sound a little technical, but exchanging currencies happens all around us in every level. Have you ever had to change your money for the accepted currency in whatever country you were traveling to for your vacation?… Well, there you have it, you engaged in a currency exchange. I am sure many of you sold a thing or two on eBay where the buyer was in another country. Although you may not notice the actual exchange, but when the person pays you… say through paypal, their money is changed to your currency by PayPal. So you receive the currency that is accepted in your country. This is the basics of currency trading. But, there is a huge different with this kind of currency trading and the currency trading that happens in a forex market.

In foreign exchange or forex trading you are not trading currency based on your needs. You are not buying currencies so you can use it in a country where its accepted. In forex, you buy a certain currency, hoping or knowing that it will rise in value, so you can sell it for a profit, at a later time. Although it sounds quite simple (and it is simple once you know the rules), forex trading is one of the riskiest kinds of trading. You can very well make a huge profit over night, but at the same time, if the price movement doesn’t go the way you wish, you can lose a lot of money over night as well. That is why it is so important that you take your time, and learn as much as you can about forex, before attempting to actually engage in trading currencies.

Forex trading started in 1970s when the major currencies were deregulated, so that their values were no longer fixed. Of course, financial institutions such as banks and big investors jumped on the idea, realizing the huge money making potential of trading currencies. Today, the bigesst and most important forex marketplaces are the big financial centers of the world. There are many big forex trading markets around the world, but when it comes down to it, London is the number one forex marketplace followed by New York, Tokyo, Sydney, Zurich and Frankfurt.

As you can imagine, in the beginning, in order to participate in foreign exchange markets, you either had to be in of those markets, or had to have a phone connection with a broker who was there. This was a big problem for many traders. Since they weren’t there, it was hard to act fast and react to the price changes. But then came along something wonderful that changed everything, the Internet! Internet made it possible for anyone, anywhere in the world, to trade in any market. From then on, foreign exchange trading started to grew dramatically. Now any one with a computer and an internet connection can start trading currencies, no matter where they live. Today’s technology also allows one to trade currencies using automated software in the form of forex robots. These are softwares that do your tradings for you, based on your commands.

Forex is one of the best ways to make money online. While foreign exchange may not even cross many overseas traveler’s mind, there are people who are always learning what they can about forex, and studying charts and financial information, so they can make money from the rising and falling currency prices, and perhaps achieve financial freedom by trading on the foreign exchange markets.

About the author: Satrap is the founder and author of controversial blog, blogstash.com. A blog full of great how-tos and information on topics like making money with affiliate programs. Visit blogstash today to get your share of this valuable information and learn different ways to make fast money online.

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