The Forex is a trading service for international currencies, similar to each country’s stock exchange system. However, the key difference is that the Forex is massive when compared to any stock exchange. In fact, it is enormous compared to all the stock exchanges in the world combined. The Forex is larger than all the world’s stock exchanges combined, turning over more than 2 trillion dollars a day, every day.
If you start a Forex account with a good Forex trading account provider – a broker – the company will supply you with reports on what is going on in the international currency markets. Some provide this information free of charge, other firms make a charge. The state of affairs is similar with regard to trading overheads.
Some Forex trading companies charge a fee per trade and others charge a spread or a percentage. You will have to work out which set-up is best for you. This is just as true of the minimum trading amount. Some firms allow a minimum trade of $100 others $1,000.
You also have to find out how long your trade is valid for at minimum. Some firms insist on a 30 day minimum others require a 48 hour minimum turn-around. If you go with a long trading period, you will not be able to take advantage of very short term swings, which is similar to day trading on the stock exchange. Day trading is not encouraged by experts, because it is very precarious, although it can provide good short term profits.
You can trade Forex on line or and off line, it makes no significant difference except that on line dealing is usually faster and cheaper. These are benefits, but the mechanics of the trade are basically the same. Being able to trade on line also means that you can trade from anywhere that there is an Internet access point anyplace in the world, which is cheaper than phoning your order through to your broker while you are on vacation.
Most online Forex trading systems or platforms will be ‘execution only’ services. This indicates that they will carry out your instructions, but will not offer any advice whatsoever. You can opt to work with an adviser from the brokerage firm, but that usually costs a great deal more and can slow things down too.
Whether you work with an adviser or not you will have to find a Forex broker that you can trust. If you are taking advice, you have to believe that your consultant knows much more than you do or else there is no point. However, the advice you will be given will probably be the Forex industry’s standard point of view. Do not expect it to be revolutionary or trend-bucking. They are not going to go out on a limb for you, in case you take legal action, although they may have put disclaimers in the agreement anyway.
However, even if you are on execution only, you will still want to work with a Forex trading firm that you feel you can rely on to carry out your orders in a timely manner. If you work out and feel that right now is the time to sell the dollar against the pound, you want to trade right now and not in four hours time when the exactly right entry moment has slipped past.
Owen Jones, the writer of this article, writes on many topics, but is currently involved with Forex dealing. If you are interested in dealing with an FX Trading Account, please go over to our website.