October 6, 2013
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Should You Start Currency Trading?

Currency Trading Options

If your intention is to enter the currency trading market, it is essential that you understand the market completely.  There are certain currency rules that apply to this trading market and if you are aware of them, you should not experience any problems.

Currency Trading Misconceptions

Many people have the misconception that foreign exchange is the same as forex trading.  Foreign exchange involves converting your domestic currency to another country’s currency for travelling purposes.  With this in mind, there are many people who also believe that you can only trade foreign currencies in your domestic currency.  This is definitely not so and since currency trading is done in pairs; you are able to choose any pair you wish to trade with.  It is not necessary for you to trade in the Australian dollar simply because you reside in Melbourne.

What are your Trading Options?

The currency trading market allows traders to trade in a currency pair of their choice.  You are not limited to trade in your domestic currency.  As long as you can cover your trades, you can choose any pair.  There are a range of currencies to choose to trade with.  Some are popular than others and these include the US dollar, Euro and British pound.  You need to discover which pairs will best suit your strategy and trading method.  This does not mean that you cannot trade in other currencies, such as the Australian and New Zealand dollar.  The lesser known currencies are not always more difficult to trade with.  The only difference between the major and the lesser traded currencies is that you cannot readily find information or trading strategies that include them.

Trading

When you intend travelling abroad, all you need do is go to a financial institution and change your domestic currency to the currency of the country you intend visiting.  When you are trading currencies, you need to find a broker, along with a suitable trading platform to carry out your trades.  There are various trading platforms, as there are various brokers.  When you register with a broker, you will be offered use of their trading platform.  You should ensure that you are comfortable using the platform before you commence live trading.  Open a demo account with a couple of brokers before you make a decision to open an account with a specific broker.  This will give you the opportunity to test their trading platforms and choose the one that you are most comfortable using.  With the demo account, you will not be using your real money so there is no risk of losing cash.

Trading Hours

Other financial markets, such as the stock market, trade at certain times of the day.  The foreign exchange Melbourne market trades 24 hours a day for five business days every week.  You will be able to trade at any time of day or night.  The market is available to you throughout all the trading sessions, regardless of where you are based.

This makes the forex market ideal if you intend trading on a part-time basis only.  You must ensure that you know when the market is at its busiest as this will allow you to increase the profitability on your trades and choose the correct currency pairs.

 

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