Currently, the trades occurring in Forex markets
across the globe is well more than $1.9 trillion each day on average. However,
the individual or retail traders make up only a small part of this market, and
they often trade through a third party such as a Forex broker or a bank. This
means the market mostly includes sophisticated traders who know what they are
In fact, when some individual investors begin
trading in the Forex market it can all seem a bit daunting. The learning curve
can be steep if you cannot master the fundamentals, and you can easily lose
more money than you can afford if you are not careful. However, some people can
learn fast and they can master the basics of the market quickly. If you are not
one of the fast learners, you may have beginners luck and your first few trades
can make you money. But you should not depend on luck to survive for more than
your first few trades. You need a solid foundation to recoup your capital and
make a decent income from your trades.
There are many financial instruments which you
can use for trading on the currency market. These include forwards and futures,
options and spread betting. All of which are similar to those used in equity
markets. However, as these instruments maintain a minimum trade size to the
base currencies, a margin is included with each trading account.
Volatility is the essence of the currency
market. Values for individual currencies rise and fall with news and
information happening around the world. Sometimes the fall in a currency can be
swift and can help to wipe out your entire account before you can react. So you
must prepare for risks if you decide to trade on the Forex market. The market
can change suddenly all because of decisions made by some government or
corporation in a distant part of the world. A terrorist attack such as that
which occurred on 9/11 did not only affect the Forex market in the US but the world over.
Therefore, if you want to become a successful
investor in the Forex market, you must learn the fundamentals about the market
and the currencies you wish to trade. Also, read press releases and other
financial and political news from around the world. You will do do well by
learning how to read graphs and charts about these individual currencies,
Finally, sign up for a demo account with a broker and learn how to trade
without using real money.
By Milton Ziegler Ziegler.