At its simplest, currency trading is where one country’s currency is exchanged for another at a set rate. It’s a huge market worth many trillions of dollars and trading takes place on a daily basis. The value of currencies fluctuates for a variety of reasons, sometimes as a reaction to economic or political news in a particular country or trading bloc, such as the European Union, or because speculators are seeking a quick profit on trades in certain currencies.
Individuals,
Currency trading is all about risk – currency markets can be very volatile so those who do it need to have a good risk management strategy – but if handled in the right way it can be a profitable activity.
What is a trading platform?
A trading platform is software that receives information from a trader and submits it to a broker. A platform such as Forex will provide information including quotes and charts, and when accessing the money market can also display a money market savings graph. All this information is given in real time so that traders can see how the market fluctuates, which currencies are strong or weak, and which are moving up or down against each other.
Is currency trading safe?
In terms of the technology it is considered safe insofar as all online technology has the potential to be compromised if good personal security is not put in place. When using a platform it is up to the individual trader to ensure as far as possible that the account is secure.
As for the overall safety of currency trading the rules for brokers are very strict as many countries have firm regulation over the financial markets in which foreign currencies are traded.
Is currency trading a moneymaker?
The trouble with financial markets is that they are unpredictable so it’s important to remember that traders can lose money as well as make it. The key to success is to take time to study the process rather than jumping right in spreading your money around. Many foreign currency trading platforms have demo software so that newbies can get a good understanding of all the processes before starting to trade.
Is a lot of equipment needed?
All that’s needed is a computer with access to a broadband Internet connection. Trading platforms are available for Macs, Windows and Linux and trading from the comfort of home can start immediately.
How expensive is the software?
Demo and starter software is, in most cases, free, with platforms offering upgrades and advanced tools for traders who want them at a range of prices.
Are emotions important for trading?
They are important in that they should be left at the door before trading. Humans are emotional: markets are not. They work by logic, which is exactly what a good trader should do.