Forex trading 101

Do you know what the definition of forex is, and what exactly is currency exchange rates? Here we define some basic concepts you need to understand in order to start trading forex.

Forex trading 101
15. April 2024 by Web Money Guy / Moneyspinner

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Forex stands for Foreign Exchange (foreign currency trading).


Currency is defined as a country's money. The monetary unit a country has chosen to use for transactions. Countries can have one or more official currency. We have also seen examples of cities have reintroduced currency, although it has not been recognized as a public currency at the national level. An example is a reintroduction of pesetas in a few cities in Spain. In March 2011, we read in the newspaper that "more than 60 stores will have agreed to accept the old Spanish pesetas currency as legal tender."


Exchange rate is defined as the price of the currency of one country relative to the price of the currency of another country. The exchange rate represents the exchange rate between two currencies. It is important to be aware of the exchange is that there are two actual prices: a bid, and a selling price. Based on these two courses, one can get a variety of other courses, such as the average exchange rate of buying and selling courses, and a course that is the median of selling and buying price.

Currency Market:

Exchange market is the largest financial market. It is characterized by trade between borders, low transaction costs, low or no fees, like often without commissions (but beware: some commercial services are greedier than others, see my list of services I have positive experiences here). In the currency market, it is almost impossible to make money on arbitrage, they serve primarily to make money on sound analyzes that predict price movements. In the currency market, one can engage in intraday trading ("daytrading") or investment / monetary instruments with a certain time horizon.

Get real-time currency quotes for free

Exchange rates can be obtained in real time from a variety of sources. For those who deal actively with money is probably the most likely to benefit from courses that are implemented in commerce solution to your broker. That way they all gathered in one place.

Become a currency speculator

Looking for a decent forex broker? Here's a list of currency trading platforms.

As a currency speculator and forex trader you must matter to dare to take bold risks, and follow your own instinct.

Trading is not a game. It can be fun, but you have to take a significant risk of being able to subsist on currency speculation.

Those who succeed are often extremely rich. Success in the foreign exchange market provides an opportunity to live luxury life, or just enjoy life without financial worries. There is no doubt that it is great to be a successful Forex trader.

Challenge is not only to achieve success, but to ensure success when you've come so far. It's not just the few who earn big money in the foreign exchange market, it happens quite often that beginners earn fat. The problem is that most people also lose the most left shortly after.

To successfully work from home as a Forex trader must have the discipline to sit well with what currency trading is all about.

Why become a currency speculator?

You can put the money in the fund. Over time it has been shown to provide a decent return on bank savings. The downside is that you are unlikely to get really rich if you let others manage your money. To become rich, you must do the work yourself.

In one study after another, we have seen that the self is most satisfied with their work. But why is it so nice to work from home?

  • When you are independent and work from home will save you time. You do not put you in the car or on the bus to get to work. With a home office eliminates all called travel time to and from work, and time is money.
  • You have no crappy colleagues or troublesome bosses to deal with. You can make adjustments to avoid to feel isolated, eat lunch with friends or fellow traders, outreach seminars and other social events related to work on a regular basis, and maybe find a partner.
  • As an independent Forex trader, you do not have to deal with cranky customers / clients.
  • Maximum freedom. The foreign exchange market is open 24 hours a day from Monday night to Friday night.
  • Influencing own income. Everything you do will affect their own income. There is never no cap on how much you can earn.

You can start working from home today

To terminate the job may seem drastic. Currency Speculation allows a smooth transition from being an employee to becoming independent.

There is no need to quit your job to start with foreign exchange trading. You can take it one step at a time. The foreign exchange market is open on the day, evening and night on weekdays. Can you squeeze in an hour each day to explore the foreign exchange market is a good start.

As you look at your activities in the foreign exchange market is beginning to yield good results, you might consider stepping down to work, laid off you, or simply cancel the job. The threshold for success in the foreign exchange market intraday trader is high, but it is not impossible to succeed.

To start with foreign exchange trading now:

  1. Do not quit your job. You do not terminate the job or quit studies to pursue a career as a currency speculator.
  2. Experiments in the currency market. In the beginning there is more than enough that you experiment in the currency market on your own when you have the time, as you try your hand at some acting on select nights of the week.
  3. Choose your broker with a functional and affordable business solution.
  4. Start trade, but first find out how much money you can dedicate to trading. Remember that trading involves risk and you should only use money that you are prepared to lose, even if the goal of course is to spend money to make money.
  5. Look at the result. Is it bad, try to find out why your strategy is not working. Is it good, you should also find out why the strategy works.

It 's not luck and bad luck in the foreign exchange market. The difference between a good and bad trader is that the good trader is prepared, while the bad trader is not.

Example: Trading foreign exchange and stocks

Stock trading is far from scary and difficult if you know what you're doing. Here we give a practical example of speculative trading in currency. The goal is of course to make money!

Besides knowledge about trading stocks, currencies, commodities or indices, there are 2 things you need to start making money on currency speculation, capital that you are willing to use for speculative purposes, and a power broker in which you can put in this capital.

Money: Let's say you have 5000 penny that you are willing to use for trading. Then we have the capital piece in place, you have money.

Power Broker: Let us further assume that you choose a broker (our top recommendation). Then we have what we need to get started: a power broker and money we can use in this online broker.

Key to getting rich: Make money and re-invest

Making money and getting rich can be done in several ways. A leisurely option is to use the money you have to raise even more money.

Money can be a tool to make more money. This is an art form that is not at all understand. He who is able to save and put up some money, you can get a return in the form of bank interest rates or inflation in the housing market.

If you want return on their money, you can do so much more than just placing them in the bank or your own home.

Example, you can invest in their own business. Putting money in mutual funds, investing in stocks, or trade in currencies, CFDs, commodities, indices, and ETF is. The possibilities are many.

Stock market can achieve an attractive return. Warren Buffet was filthy rich to invest in the stock market, but to really get rich in the stock market you have to have some money to start with too.

Trading is a more intense way to spend money. Are you going to build you up quickly and with fairly limited trading capital is the best solution.

Risk can align yourself as a trader, but high risk also means the opportunity for greater returns.

The best way to start trading is to do the following:

  1. Figure out how much you can afford to lose (it's a possibility that the money invested is lost, and therefore should not risk money you really can not afford to lose).
  2. Put this money in your online broker. We have a good knowledge of various business solutions, and have listed the ones we think are the best here on this page (see the top of the right column).
  3. Experiment with small amounts in the market. Find out how you can make money in forex by trying it out.
  4. Using fundamental analysis - Observe how the news affects exchange rates and financial markets. This is the best way to learn trading at.
  5. Using technical analysis - use a trade platform me good technical indicators.

Become your own boss as a currency speculator

Looking for a job? Here's a vacancy that will be available until it is occupied by you: Be your own boss and starting as a currency speculator. It's not as drastic as it might sound.

Is flush with vacancies in the newspapers. Becoming own boss, independent and responsible for their own income is a dream many people have. However, it is not at all who dare to realize your dream.

Sentenced to an insufferable job?

To be employed by a company you do not own have both advantages and disadvantages. Too many roads unfortunately drawbacks up for benefits.

Common problems related to the workplace is as troublesome bosses, annoying coworkers, bullying, long journey, unfavorable working hours, work pressure, tedious tasks, for difficult jobs, poor wages... The list is long.

Trading can be learned

Opportunity to start a career as a Forex trader is open to all. You are not doomed to be in the job you are now in life. The education and jobs we have today is insignificant.

Basic skills such as being able to read and understand basic mathematics is a given, and a certain level of discipline must be expected. Beyond this, we would argue that anyone who wishes to learn trading.

Art of Looking into the future

Trading is the art of divining the future. But it is not magic or witchcraft underlying but fundamental or technical analysis.

Is the future unknown? Can know anything at all about the future?

No one can have knowledge of the future. What we have are assumptions based on Perception of past and reasoned us back to how things will develop.

Knowledge is knowing that sunrise today was at 6:10. What we can assume then, that the sunrise tomorrow will be about the same time. Astronomers can exact time when the sun will rise tomorrow, with a margin of error of only a few milliseconds.

Seismologists can give quite exact timing of when an earthquake - triggered tsunami will hit a given point, based on a set of calculations. We know that if A happens under certain conditions (earthquake off the east coast of Japan) will also occur B (tsunami on the east coast of Japan).

These are examples of how we can predict natural phenomena.

Predictions in financial markets

Although the future is unknown, it is possible to substantiate the various outcomes. There are many ways to do this, read on and become wiser...

Financial markets are also affected by natural phenomena (earthquake in March 2011 in Japan and the subsequent disaster affected financial markets around the world). The probability that shareholders sell shares (selling out for cheap) is imminent by natural disasters, we see that time and again, and speculators are urgently looking to short after a natural disaster, or picking stocks on the cheap.

Yet it is so much more than natural phenomena which are crucial for the development of financial markets.

An important point is that any financial market is controlled by the people, and that's when the psychology that prevails.

Long-term investments should look at the fundamentals. Is the company able to create growth. Is management fit to create increased revenue? How does the outlook for the industry? In which direction is the global economy?

In finance, there are two established ways of predicting the future:

  • Fundamental analysis
  • Technical analysis

Fundamental Analysis is an analysis of "everything". Man looks at the underlying financial instrument (stock, currency pair, etc), but in addition should also look at the macro level. Everything that relates must be included in the calculation. Macroeconomics as well as the smallest detail can be decisive for the future development.

Hvermannsen it is impossible to make a good fundamental analysis of a company or a financial instrument. There are too many factors that play into that as possible.

Technical Analysis is based on only two factors: price and volume. Because there are psychological factors that control the market, it is the human factor you need to focus on. A graph of price movements, such as intraday graph of the currency pair USD- EUR gives us key information about the market. Here is all the information about the market " boiled down " to a simple graph showing the trend.

Graph has formations, valleys and peaks. Trend lines showing which direction the graph goes in. Trading volume indicates the amount being traded at any time.

Bagrkunn of just price and trading volume information we can give a good analysis of future prospects. We can not know, but we can assume what will be most likely. There analyzing financial markets based on volume and price is called technical analysis.

We have now no knowledge whatsoever about the fundamentals. All we need to know is what the price is now, what it has been, and to which the volume has been traded.


Trading in ETFs has become more widespread in recent years. Several have been an eye opener for all the benefits that ETF trading offers compared to traditional stock trading and other speculation in the currency market.

Here you can, for example, act in massive exchange traded funds that EU Stocks 50, iShares Japan or Lyxor CAC. You simply speculating in that index funds that will go up or down, just as you do with stock trading.

Difference between ETFs trade and putting the money in the fund is quite obvious. There is no charges in ETF trading, and no fees to your broker.

Currency trading

Currency trading allows you to earn money to buy and sell currencies. You can trade many small transactions and make a lot of money that way, or you can leverage your investments and make money on margin trading.

Forex and Forex is the way two terms used interchangeably. Forex means Foreign Exchange and what was then the is "foreign currency trading."

Buy and sell currencies

That's currency, the foreign exchange market. This is where it happens. This is the largest market for financial transactions in the world. It is massive! We are no longer talking millions or billions, but trillions of dollars rolling through here in transactions every day (in other words, very good liquidity).

Currency Broker

Order to trade foreign exchange you need a currency broker or a similar service that you can use to trade currencies in a speculative manner. The "speculative" we believe that you are acting with the intent to make money in a way that can provide benefits if your assumptions about movements in exchange rates are correct.

Here is a list of some popular and approved currency and forex brokers on the internet.

Trading in stocks, currencies, commodities and indices can be learned, and so can trading in CFDs. The risk is limited to the money you deposit.

Anyone who signs up with an online broker and you will get the opportunity to try their free demo account.

Remember, when trading CFDs your capital is at risk. This goes for most kinds of financial trading. Just don't forget that. If you lose money, blame yourself. If you gain a profit from this advice though, feel free to drop a line, and if you feel like it even give us some credit for helping you to gain money. Anyways, remember: YOUR CAPITAL IS AT RISK!

This is a golden opportunity to learn and test CFD-trading for yourself.

Much is written about making money on the internet, mostly rubbish: advertising wrapped in article format. Don't believe anything you read without thinking first. This goes for EVERYTHING you read, even from this site (even though we are honest people). Think for yourself!

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