If you have had it with the stock market and are still licking your wounds from the 2008,2009 losses, there is another investment opportunity to try. If you loved the thrill of investing in stocks, but can't afford the risk now, you may want to try getting into the forex currency trading market. Forex means: foreign exchange market. The forex currency trading market generates approximately $3.2 trillion dollars worth of transactions each day which makes it a giant compared to all the other capital markets world wide. When trading on the forex market you are dealing with 8 major currencies rather than thousands of stocks, so in a way it is simpler. To start you can trade in forex trading pips and then expand.
Forex trading pips are the smallest unit of price that a currency can be traded in. It is kind of like the minimum stock investment you are allowed to make in the stock market. If you invest the minimum necessary for several currency pairs, you keep your investment limited and can try more currencies. When you are more sure of your choices, you can liquidate the lesser performing ones and buy more in the better performing ones. You always deal with currency pairs which are 2 currencies involved in a foreign exchange rate like EUR/USD. The first or base currency here is the Euro, the second is the United States dollar
The eight currencies most traded are: US Dollar, Euro, Swiss Frank, Japanese Yen, Australian Dollar, British Pound, Canadian Dollar and the New Zealand Dollar. All currencies have interest rates attached to them by the central bank of their country. You are really buying one currency while selling another. You earn money by the difference in interest rates for the pair and the hoped for increase in value of the currency you buy. In this transaction yield drives return. Forex trading pips, or small investments, earn you money when the interest you pay on what you sold is less than the interest you are earning on what you buy.
Some of your trades will win and some will lose you money. To increase your win ratio you need to become familiar with all the 8 countries involved in the currency trading market. You need to familiarize your self with the financial and social health of each country. It is important to understand the economics of the currency countries to be able to know the interest rates and their trends. Healthy countries have rising interest rates, while counties in trouble tend to lower interest rates. Figuring out what currency will have higher interest rates is what makes you money.
Also pay close attention below...
Starting off with FOREX trading can be a hassle. However, if you are looking for quick profits there are a couple of software programs that trade on autopilot for you and all you have to do is press one button and see the profits rolling in.
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