Forex Trading Advice
Generally speaking, the foreign exchange market (also known as the FX market) is a worldwide marketplace where national currencies are traded. The market offers traders a way to hedge their currency risk and earn interest rate differentials.
There are several factors that influence the price of a currency. Some of these factors include global politics, central banks, economic fundamentals and technical analysis.
A trader can open a position in the Forex market by putting up a small amount of his or her own money, as well as a little margin money from a broker. Leverage is an effective tool in the forex market, because it allows the trader to gain a large amount of capital with little or no extra investment.
When trading, it is important to know the difference between a bid price and an ask price. The ask price is the lowest price at which you are willing to purchase a currency. The bid price is the highest price at which you are willing to sell a currency.
The difference between the two prices is called the spread. The size of the spread is largely dependent on the size of the trade and the demand for the currency. If the demand for a currency is strong, the bid price can be higher than the ask price.
There are three main venues where the currency is traded: the spot market, the forwards market and the futures market. Each of these markets has a different trading style.