The Forex Currency Trading market is an indispensable tool for individuals doing business in Europe, Asia, or anywhere else in the world. Through savvy foreign currency exchange trading, traders can leverage big positions in speculative portfolios or hedge business deals denominated in other currencies.
What is Forex?
The Forex market, unlike other stock or commodity markets, is a decentralized market based on an electronic network of brokerages around the globe. The exchange operates 24 hours a day from Sunday night to Friday night. Trading opens in Syndey and moves around the world to Tokyo, and New York. Trades in the most popular currency pairs, called the Majors are typically very liquid. When news happens, the global currency market is there to adjust.
Leveraged Currency Trading
Forex Currency Trading is a highly leveraged form of trading. Leverage can work in the favor of the trader; you need very little equity to trade accounts worth substantial sums of money. However, with high leverage comes substantial risk; it is possible in some types of Forex accounts to lose more than the amount you placed in your trading account.
Risk Control in Forex Trading
For traders who use very leveraged investment vehicles like foreign currencies, it is critically important to have a clear strategy for risk control to avoid a major loss of account equity. This is because very small movements in currency values, down to five decimal places or more, can be magnified into profits of much larger dollar amounts. However, this is only possible consistently by limiting position size and using stops.
Open a Currency Trading Account
You can open a Forex trading account for as little as $250, however experts recommend that you fund a much larger amount than that to make leverage easier to manage. There are a number of good Forex currency trading companies that have excellent customer service.