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FOREX TRADING STRATEGIES IN A NUTSHELL

FOREX TRADING STRATEGIES IN A NUTSHELL


What you need to know about Forex trading strategies and how to trade currency। Simply put, Forex Trading is buying and selling of international currencies. The US dollar is almost always the base currency against which other currencies are bought and sold in real Forex trading. Of course, one's local currency can also be used as a base currency. In such a case it will be called a CROSS TRADE. Cross trading is then an exchange of two currencies where US dollar is not involved.

How to trade currency
Say, you got a tip or you suspect that the Japanese Yen might appreciate in value against US dollar in near future. The current exchange rate is ¥ 120 to a US dollar. You go to the bank and exchanged US$ 10,000 for ¥ 1,200,000.00
US$ 1।00 = ¥ 120.00 US$ 10,000.00 = (120*10,000) You will get: ¥ 1,200,000.00

Profit

Later on, as expected, the Yen appreciates by Five Yen to ¥ 115 to a US dollar. You then take your Yens back to the bank and exchanged them into US dollars. You will get US$ 10,434.78. This extra US$ 434.78 will then be your profit on top of your initial investment of US$ 10,000.
¥ 115.00 = US$ 1.00 ¥ 1,200,000.00 = (1/115)*1,200,000 = US$ 10,434.78
Initial Investment was: = US$ 10,000.00
Your PROFIT: = US$ 434।78

Loss

On the other hand, instead of appreciating, the Yen further weakens. After all, it was only an expectation that the Yen will appreciate, not a guaranty. Say, it weakens by Five Yen to ¥ 125 to a US dollar. Of course you now have a choice to either hold on to your Yens until it appreciates or exchange them back into US dollars. Suppose, you want to exchange them back into dollars for fears of further Yen weakness. You then take your Yens back to the bank and exchanged them into US dollars. You will get US$ 9,600.00. Your loss is US$ 400.00. Now your initial investment of US$ 10,000 is reduced to US$ 9,600.
¥ 125.00 = US$ 1.00 ¥ 1,200,000.00 = (1/125)*1,200,000 = US$ 9,600.00 Initial Investment was: = US$ 10,000.00 Your LOSS: = (-US$ 400.00)
Forex Trading is neither gambling nor should it be perceived as such. In gambling, once you place a bet you cannot withdraw from a losing situation. You either win or loose. On the other hand, with Forex trading, you decide how much you are prepared to lose or wait until you are in profit. Forex trading strategies provide several means to accomplish just that.
Hence, one can trade Forex euphorically or in an organized manner. The tools and techniques are there to help you learn how to trade currency, it's up to you to use them for your best interest.

Day Trading Forex Currencies

Day Trading Forex Currencies.
The world of The Day Trader has become especially popular in recent years। But those who engage in Day Trading FOREX Currencies are some of the most highly skilled and most profitable traders on the market. But beware; Day Trading FOREX Currencies is not for the faint of heart.

First consider a typical trading day। The day begins on Monday in Sydney, Australia and ends on Friday. It runs twenty four hours a day for the entire business week. Couple this with the aspects of foreign denomination currencies, and social and political influences affecting the global community, and you will see why Day Trading FOREX Currencies can be a fast-paced, if not dangerous environment to move and manipulate fortunes with.

While many National Banks and Large Corporations engage in FOREX Trading, the arena of Day Trading FOREX Currencies is left to the medium and smaller traders। These individual and small houses are practically built for the speed of thought and quick reflexes required to make huge, quick profits Day Trading FOREX Currencies. The larger entities move too slowly and thus, generally avoid Day Trading FOREX Currencies.

But before you get started it might be wise to make sure you have the financial backing and risk loss ability to even consider Day Trading FOREX Currencies। Fortunes must be waged and are lost on a constant basis. So before Day Trading FOREX Currencies, make sure (as every wise investment counselor will tell you) that you have the money to gamble.

In Day Trading FOREX Currencies, you will find that you’re going to need a fast computer, up-to-the-minute telecommunications equipment, and a thorough knowledge and understanding of the global community. It pays big if you know your target and subjects, as Day Trading FOREX Currencies deals with a wide variety of foreign entities and the research level for this can be exhaustive in nature. So before Day Trading FOREX Currencies, make sure you’ve got your ducks in a row, as the old saying goes.