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Getting Started with Forex Trading

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forex trading brokerMany people are looking for ways to maximize their wealth and seek opportunities that will give them financial freedom and success.  One popular means of investment is venturing into the “money market” or the Forex market. So the question is how do we invest and earn profits from the Forex trading?

What is Forex?

Forex is the shortened term for foreign exchange, which refers to the exchange of currencies of different nations. One example is the exchange of one dollar to euro. Now, the foreign exchange market is the buy and sell of foreign currencies.

The only difference of Forex with the stock market is that, in Forex trading the goods that are bought and sold are currencies (money), while in the stock market the shares of different companies are bought and sold.
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What do you get from Forex trading?

There are two kinds of earnings or gains that you will get from investing your money in the foreign exchange market , similar to that of investing in the stock market.

The first is called the realized gain, which results when you sell your currency on hand for a higher price than the price that you paid to acquire it.

The other kind is the unrealized gain where the currency you have on hand increases in value, but you do not sell it and just hold it.
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Forex trading pricing factors:

The buying and selling prices of foreign currencies in the Forex market are determined by several factors.

One factor is that of basic economics, involving the demand and supply of the currency itself that is available for trading in the market.

Other factors include the political stability and economic condition of the country owning the currency. For instance, the stable and strong economy of Korea makes their national currency (the Won) increase in value as oppose to other foreign currencies.

Are you qualified for Forex trading?

Now we ask ourselves if we are qualified to invest or trade in the foreign exchange market. The general test is to assess our financial condition. This is a very necessary step.

Understandably, to be able to start Forex trading we need to have a sufficient amount of free money on hand. By free money, we refer to the excess cash on hand that we have after deducting our usual expenses and regular savings. This is because knowing how much money we have at hand will determine our risk level and the level of return that we require from our investment.

For assessing your financial standing, you may want to consult with financial institutions or brokerage firms to give you an investment policy statement that will help you determine where you should invest your money in considering your constraints and sources of income. If you think that you have enough excess money that you can use for trading and if you are ready to lose or gain profits from Forex, then you can now start trading!
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Getting started with Forex trading

To get started on Forex trading, you will first need to choose a trader or a broker. You can do it on your own if you have enough experience in dealing with the foreign exchange market. But it is still recommended that you have someone to assist you in handling the documents for trading in the Forex market.

However, in the digital age, various financial firms are offering online or virtual trading accounts that will allow you to practice trading in the foreign exchange market at no cost at all.

forex trading

They are also offering tutorials and tips along with the virtual trading accounts. It is always recommended that before you trade for real, you should first try out the virtual trading account so that you’ll have an idea on how to use the platform and be able to adapt to the trading environment.

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Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally or believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials.”

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