By James McKee
The world of trading can be a very intimidating place for those who are not familiar with the finance world. Charts look chaotic at first and there is a language that is completely unique to the trading world. When first trying to figure out whether or not trading is right for you, and it is important to have a basic knowledge base prior to deciding whether or not you want to move forward. After laying the foundation for your trading education there is one thing to always remember: “You will win, but you will also lose.” No one profits from every trade they make, but with practice there is the opportunity to win much more often than you lose.
In the world of day trading the major markets most people participate in are stocks, commodities, futures, and currencies. Among the most active markets is in fact the currency market; the currency market or Forex (Foreign Currency Exchange) is an exchange in which currencies are compared against one another to determine value. The only way to figure out how much the US dollar is worth is to compare it against the Euro, the Swiss Franc or other currency. When currencies are traded for profit they are “paired” in order to establish the current value of a given currency against another.
While shifts in the value of currency are relatively small (often less than 1% a day) the use of leverage makes it possible for a trader to profit immensely from a relatively small amount of exposure. For example, if you were to invest $2000.00 at 50:1 leverage that would mean that you invested $100,000.00 in the market place, and if you make a trade going in the right direction, and it moves one percent you just made $1000.00. Of course, you do not have to wait for it to move a full one percent, and taking even 20-30% from a trade is not bad if you are making that from an investment every day.
Of course there has to be a measure of discipline within a trader’s routine prior to even thinking about trading live in order to profit. The use of a free demo account is invaluable to new traders since it provides the exact same experience as live trading (minus profits or losses of course); no one should ever use real money until they are profitable in a demo account. With some learning and due diligence applied a new trader could have there demo account at a steadily profitable status within months; although, everyone is different and no one should give up so long as they are making progress. There is the very real opportunity for many who love the finance world to move onto the online forex exchange and make it a full time job, but only those who are willing to truly commit them sel
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.