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Electronic currency trading is simply a way to address on-line changes. You may have seen it described as foreign exchange, Forex or FX. This is something that appeals to many people who are looking for a way to make money on the Internet using their home computer.
Forex is a bit like stock trading, although the market itself is very different. You have the same goal to buy something and hope the price will increase. But with Forex, you are always dealing with money so you can make money from a price decline, falling by exchanging currency in a currency stable or increasing.
For example, imagine you are trading on the currency pair EUR / USD. It is a common combination for beginners. The U.S. dollar and the euro are most currencies exchanged and there is much information available to help you, so it is a good choice to start.
With this pair you can choose to buy or sell euros. If you place a buy order, this is called “going long”. You must do this if you think the euro will strengthen or increase in value (or the dollar will fall).
If you place a sell order, which is “go short”. You must do this if you think the dollar will strengthen (or the euro will weaken).
simply enter your goal is to make a profit by closing the trade when the price goes the way you expected. Closing of the exchange would involve the sale of euros if you have time, or to buy them if you short.
Of course, there is a risk. The price could go the wrong way, and you could make a loss. It is therefore important to have good information and a profitable trading system.
You do not need much money to start with electronic currency trading. Many brokers will allow you to start with a few hundred dollars, but it is better if not all the money you have in the world!
Forex trading involves
margins. This means you can place orders for much more money than you actually have. To do so, through a broker who provides the balance of the order. They know you’ll be closing the trade at some point and if a currency is down, another is rising. Monetary values ??are relative, so it is not possible for all currencies in the accident so that all stocks can crash.
Currencies can be volatile, but you can use stop losses to ensure that you do not lose more than you are willing to risk. Some brokers limited risk accounts where they will automatically close your trade if you lose your balance. This means you do not have the dreaded margin calls that can be so disastrous for stock traders.