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Forex Trading Advice

Forex Trading Advice

Forex trading is an active market participation activity where individuals seek to gain additional capital by observing changes in the exchange rate of currencies. Unlike stocks, the variables that drive forex prices are not necessarily well-known, and they often involve economic factors for the underlying countries whose currencies are being traded.

Money

Forex trades are based on what is called a lot, a standard unit of currency. The lot size typically ranges from 100,000 units, though micro (1,000) and mini (10,000) lots are also available for trade.

Advantages

Forex offers several advantages to traders, including liquidity and tight spreads. These advantages are largely due to the fact that there is a high volume of trading happening on any given day.

Risk management

As with any financial instrument, the market can be volatile and a forex trader must be able to handle this volatility without blowing their account. This means establishing good risk management rules for each trade, including using stop losses to protect against unexpected moves in price.

Trading styles

Each trader has his or her own unique trading style. Some prefer to enter trades as soon as the market breaks a key support level, while others prefer to wait for confirmation before taking action.

Trading sessions

There are three primary forex trading sessions, during which the market is at its most active. These sessions are the Asian, European and North American sessions.

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