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How To Separate Hype From Reality In Forex trading

By Greg Hall

For most people who may be thinking of entering the Forex trading game some of the terminology can be confusing. In fact there are many who don't really understand what Forex is about to begin with. In a nutshell, For most people who may be thinking of entering the Forex trading game some of the terminology can be confusing. In fact there are many who don't really understand what Forex is about to begin with. In a nutshell, Forex or FX is a term that is used to describe the trading of multiple forms of currency all over the world. Some want to get into FX just because they like the idea of how exciting and exotic it sounds to be trading foreign currencies, but there are many risks and advantages involved.

For starters, the market for foreign exchange is enormous. There are over 100 times more trades than the New York Stock Exchange with nearly two trillion trades every day! In addition to the incredible volume, Forex trading is also almost entirely speculative, which gives it somewhat of a higher risk than some may be accustomed to. Still another large difference is that unlike trading through a central exchange like the NYSE, the trading occurs on the over the counter or OTC market. Trades like these are completed directly between the seller and the buyer via telephone or online. One of the biggest differences in my opinion that can be a positive or a negative is that the trading takes place 24 hours a day in major cities all over the world, unlike the major stock markets which close at specific times each day.

The main trading that drives the Forex market is called currency trading which is a trade where one currency is bought and another sold at the same moment. This act of trading is known as a "cross" in the FX movement. Some of the most traded currencies include the US dollar, the Australian dollar, the British pound sterling, the Japanese yen, and the European Euro, with the US dollar accounting for almost 90 percent of all currency trading. The next most popular currency is the Euro, which is involved in almost 40 percent of all trades and gaining popularity all the time.

The values of the currencies fluctuate daily in reaction to news reports on changes in inflation, interest rates, gross domestic product growth, trade and budget deficits and surpluses, as well as many other economic factors. This is the reason you will see those who are highly involved in Forex trading following the news reports very close and staying on top of breaking news 24 hours a day through the internet and 24 hour cable news channels.

As you can see there are many differences between FX trading and regular stock trading and it is very easy for a novice to lose a lot of money by not being informed. It is best to start out slow and learn the business before investing a large sum of money.

Gregg Hall is an author living in Navarre Beach, Florida. Find more about this as well as foreign currency trading at

Some Quick Forex Information

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Canada has been climbing on the list of the world's oil producers for years, and is currently the ninth largest exporter of oil worldwide. Since the year 2000, Canada has been the largest supplier of oil to the U.S., and has been getting considerable attention from the Chinese market. It's predicted that by 2010, China's import needs for oil will double, and match that of the U.S. by 2030. Currently, Canada is positioned to be the largest exporter of oil to China. This puts Canada's dollar in an excellent position from a trading perspective.

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Forex/Currency Trading: It is a sentiment game w/ a crowd mentality where even the best players w/ the best forecasts are tricked out of good positions by the magic of price action.
More info on Forex trading

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Current events and the state of the economy in any given nation is one of the top economic indicators used when analyzing the Forex. Factors such as unemployment numbers, housing statistics and the current state of a country's government can all affect changes in the Forex. When a country is feeling optimisitic about the current state of affairs in their country, prices of the Forex will reflect this. When a nation experiences political unrest, large amounts of unemployed workers and inflation, the rate of the currency will be reflected. Sometimes, this indicator tends to be overlooked, but can serve as an important gauge in the fluctuations of the Forex.

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Dollar fell again as Fed made softer comment on US economy.

Thu, 26 Oct 2006 17:03:00 GMT