People have been trading one currency for another since the beginning of time. Advent of Internet Democratized Forex Trading Before the Internet became a household name, Forex trading was an institutional necessity. However, the proliferation of the Internet mtgo guide to trading forex up the possibility for almost anyone to trade Forex as a range of Forex brokers started offering online trading platforms.
Online only Forex brokers soon began offering low initial deposit and high leverage, that allowed anyone with a few hundred dollars to open a Forex account and trade large amount currencies. Even if you were living miles away from major financial hubs like New York or London, and wondering what is Forex trading and how to profit from it, you could still do it from anywhere as long as you had an Internet connection. Today, smaller retail investors make up a significant portion of the overall global Forex market. Since Forex is a highly liquid market, the price of most Forex pairs fluctuates almost every minute. The price of some highly volatile Forex pairs moves so fast that you can open a trade, and close it with within few minutes with a significant amount of profit by using substantial leverage. All you need is a Forex brokerage account and a stable Internet connection. 200,000 with this account, thanks to leveraged trading.
The obvious way to trade Forex would be speculating currency prices, where you buy one currency and simultaneously sell another currency. USD, if the rate of EURO goes up against the US Dollar, you stand to gain from the price difference. Besides price speculation, can also trade Forex to hedge your investments in stock markets. Conclusion Most small retail Forex traders like yourself start trading with technical analysis, which is the science of reading price charts. However, if you are serious about learning this business, you should invest some time understanding how the global economy works.
For example, understanding basic fundamental indicators of an economy like employment rates, production level, interest rates, and the role of central bank in regulating inflation, etc. With time, as you gain more experience as a Forex trader, you will find that there is more than one way to profit from the Forex market. Traders tend to use many indicators without researching or knowing what they are and how are they calculated. You can use stochastics oscillator to measure the speed and momentum of a price over a time period. A low value point to the strong uptrend as much as it points to a strong downtrend.