Trading on the Forex Markets

Currency and stock markets from a large number of nations make up a combined trading market where millions and millions of dollars and other currencies are exchanged each day. Much like the stock market, the forex market permits persons purchase and sell, but the marketplace itself and the outcomes it delivers are much, much bigger. The main participants in forex trading include Deutsche bank, UBS, Citigroup, HSBC, Barclays, Merrill Lynch, JP Morgan Chase, Goldman Sachs, ABN Amro, Morgan Stanley, along with many other banks and brokerage firms.

To become involved in forex trading as a person, you should make contact with any of these big broker assistance firms. Although everybody can get involved in forex trading, it requires time to discover what is hot, what is not, and just where you should put your cash at any particular time. International banks are the largest players on the forex markets: They have millions of dollars to invest day after day in order to earn interest. This is just like the way banks profit on the funds you deposit.

Consider the bank that you use on an almost every day basis. Do you know if you can go there and get foreign currencies if you are planning on traveling internationally? If not, your bank is probably not involved in foreign exchange trading. If you want to know if your bank is involved in forex trading, just ask any bank manager. Another way is to examine the financial information sheets that banks use to report every quarter to the public.

If you are new to forex trading, you must understand that there is no individual person or lone bank that is in charge of all the transactions that occur in the forex marketplaces. Various currencies from around the globe are exchanged on the forex markets. The currencies that are exchanged most frequently are the US dollar, the Euro, the Japanese yen, the British Pound Sterling, the Swiss franc and the Australian dollar. These are just a few of the currencies that are exchanged. Many other international currencies are involved, as well. The main marketplaces for the forex transactions are situated in London, New York and Tokyo. There are also smaller transaction locations all over the world.

Forex trading can be a very dangerous pursuit but it can also be very lucrative. To reduce the risk for new participants, most brokers provide demo or practice accounts where you invest with phony money but in an actual marketplace for a period of time until you acquire the skills you will need. When you begin to trade, you may want to think about utilizing automatic trading computer programs, also called a “forex robots” or sometimes as “EAs.” This type of computer program can be programmed to just recommend trades or it can be left on its own to buy and close your trading positions for you. It is all a matter of how at ease you are with trusting a computer to make big fiscal decisions for you.

A word of warning about forex automatic trading software: It is set up to make calls based on what is known about the trading markets at the time the robot is programmed. This is fine, most of the time, but sooner or later, there is bound to be a disastrous occurrence in the world such as the 2011 Japanese earthquake and tsunami which will affect currency values drastically and immediately. Your trading robot would not and could not be aware of this news and would trade as if it never happened.

Another, perhaps better, trading tool is what is known as a forex signal service. Here you are relying on the expertise of professional traders to make your trading decisions for you. If a certain professional trader has a sterling track record and you copy every trade he or she makes, it would seem that your track record would duplicate the track record of that professional trader. Or, as a beginner, you can decide to “go it on your own.” Good luck with that!

© 2011 Robert M. Gillespie, Jr.

Bob Gillespie writes on many subjects including forex trading. He is a full-time Internet marketer and author who lives on the island of Maui in Hawaii. Learn more about foreign exchange trading at Bob’s blog at:

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