What is forex trading is all about & which is the best investing company for forex trading. What is the risk?
Saturday, July 18th, 2009 at
8:05 am
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Xelam has given a good answer. You can always go online and check out forex articles.
The risk is making wrong entry and exit points resulting in loss. As such, if you start forex like a lot of new comers to forex, without managing your risk, you can get burnt.
I believe managing the risk is most important. Don’t take risks that you can’t afford to take.
However, nowadays for new comers there are many new software systems that make it easy for those with no experience to trade and manage their trading.
Do you mean broker when you say investing company? So far, I’ve only used Easy Forex.
Forex trading is basically trading of currency pairs. It is a non delivery trade, which means that there is no physical transaction of currencies, but it is rather an agreement, or "contract" or "forex deal", to trade specific volume of a pair of currencies at an agreed exchange rate. Examples of these pairs are EUR/USD; USD/CAD; USD/GPY; GBP/USD; USD/JPY, etc…
Forex trading is always done in currency pairs. For example, imagine that the exchange rate of EUR/USD (Euros to US dollars) on a certain minute is 1.1999 (this number is also referred to as a “spot rate”, or just “rate”, for short). If an investor had bought 1,000 euros at that time, he would have paid 1,199.00 US dollars. If five minutes later, the Forex rate was 1.2222, meaning the value of the euro has increased in relation to the US dollar. The investor could now sell the 1,000 euros in order to receive 1222.00 US dollars. The investor would then have $23.00 more than when he started five minutes earlier. however, if at the time of selling his Euros the rate fell to 1.190 then he lost $9.00.
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