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Forex Trading Explained to the Average Joe

Understand the basics of trading in currencies

Foreign exchange is a decentralized form of trading in currencies. The goal is to utilize the difference and fluctuation of currency values in order to generate profit. In lay man’s terms, it is you exchanging money that has gone up in value for another type of money; for example, exchanging your US Dollar for Euros. Experts will tell you that there are several techniques or trading secrets that will allow you to generate profits. This article will simplify the same.

Proper Forex Trading Education

Trade graph
Forex involves trading in currencies in order to generate a profit from fluctuating currency values
Before you actually start Forex trading, you need to understand the basics. You can do this by reading self help books, relevant and trending articles, or watching others trade. Simply put, you want to know when to:

1. Keep, buy, for lack of a better word, “hoard” a certain type of currency;

2. Exchange the currency for another;

3. Determine the currency to exchange it with.

Maximizing Forex Trading Profits

Generally speaking, there are two ways to make a substantial profit. The first is to trade in huge volumes i.e. use more money; and the second is to trade regularly which usually means several, even dozens of times a day. This can be utilized one at a time or in consonance with one another.

Online Forex Trading Platform

The good thing about trading in Forex, unlike in the stock exchange is that you can do it without utilizing “brokers”. However, like any other endeavour, you need a reliable source of information. Whatever you do with that information or however you interpret that information is strictly up to you. This means you have full control of your money.

A trading platform is one such place you can log into your account, get information like the economic and political situation in Europe, the fiscal cliff in the U.S., the huge development boon in China, or the increase in Business process outsourcing in the Philippines and India.

If you want to take things up a notch, you then start familiarizing yourself with charts to see how well the economy has been doing in the long term and short term. For example, how is the employment rate, money remittances, central bank circulars, etc? If you want these information sent to you as close to real time as possible, you request RSS feeds, SMS alerts, tweets, etc.

Forex Trading Tips

You can treat forex as a hobby, part time job or even a full time job. It really depends upon the number of hours you want to spend each day trading. Regardless of how you think of forex, certain realities must never be forgotten. These include but are not limited to:

1. Taking your education seriously.
This way, you avoid making stupid mistakes that cost you money.

2. Maintaining a trading ceiling and trading floor.
For example, if you trade daily, then stop whenever you reach a certain amount of profits. More importantly, you also stop whenever you have lost a certain amount of money. This way, you cut your losses, analyze the problem, and trade another day

Guest post by FXCC - Forex Trading ECN Broker

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Mark Twain