Friday, November 17, 2006

Forex 101

So since I am starting to get interested in Forex, I figured I would write about some of the basics that I've picked up. First of all Forex or Foreign Exchange Market deals with trading currencies with other countries or other countries currencies. The Forex market is also highly liquid, you can get in and out fairly quickly because there are always willing buyers. The Forex market is opened 24 hrs a day from Sunday afternoon to Friday afternoon. So you can pretty much trade anytime day or night you get the urge. "There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation"( In the Forex market you can also buy on margin or leverage. On for a $250 account you have leverage of 200:1. That means basically that you could trade for up to $50,000 with a $250 account. This is the part that sounds like trouble to me. I think buying on margin could be a little risky. Anyway here is my disclaimer. I know absolutely nothing about trading on Forex, so I am not giving out any advice, I am just commenting on some stuff that I have learned because I would like to get into Forex trading. Please leave any comments if you can give me some advice on Forex Trading or if you know of a book that I could buy. Thanks.