Global, simple and highly leveraged... the appeal of FX currency trading.
The foreign exchange, currency exchange, Forex or FX market is among the largest and most liquid in the world.
The majority of trades are made between banks and other financial institutions which simply need to convert one
currency into another. Yet at the same time, Forex trading is highly attractive
to individual traders who want maximum leverage on their investments.
With leverage as high at 50:1, investors can take significant Forex positions for a few thousand dollars vs.
tens of thousands for equity trading. A side benefit is the thrill of trading elbow-to-elbow with household
names in finance.
Of course, extreme leverage also means that an investment in currency trading can quickly work against you.
This is why an education in Forex trading, such as that offered by Online Trading Academy, is essential.
Two good reasons to trade Forex:
First is simplicity. Unlike the thousands of stocks that an equity trader must research, there are only a few
major currencies and at any one time you will be doing a currency pair trade of one currency for another. In fact,
over 80% of FX trading is concentrated in pairs of just six currencies: U.S. Dollar, Euro, Yen, Pound Sterling,
Swiss Frank and Australian Dollar.
A second benefit of Forex trading is convenience. Trading is round the clock and moves with the sun; the Asian
market is followed by the European Market then the U.S. Market and back to Asia, 24 hours a day except on weekends.
Somewhere in the world, someone is always trading Forex and so can you during trading hours that last from 22:00 GMT
on Sunday to 22:00 GMT on Friday. This makes Forex trading ideal for U.S. investors who can only trade in the evenings
when the major equity exchanges are closed.
Add in the leverage of starting with a small initial capital outlay, and you can see why Forex is the choice of a
growing number of Online Trading Academy students who want to start fast with dramatic upside potential in their trading.
Some technical details about FX currency trading:
In Forex trading, currencies are valued down to the "pip"—the smallest unit of measurement available for a
currency pair. For example, in a Euro/Dollar Contract, a pip would be worth 1/100 cent. This sounds like a unit almost
too small to measure—but in a typical (“standard”) Forex contract $1,000 can control $100,000 in currency so a
Euro/Dollar pip is worth $10, and a typical day’s move of 100 pips up or down could result in a substantial profit or loss.
There is no central market for Forex; currency trades are made over-the-counter in billions of individual swaps every
day. The traditional hub of currency exchange is London with New York, Tokyo, Hong Kong and Singapore also conducting
significant trading volume. (Of course, Online Trading Academy graduates conduct all their Forex
trading online connecting from their desktops using a state-of-the-art trading platform.)
The most basic factor influencing currency exchange rates is supply and demand; money supplies are constantly fluctuating
and if a currency is in reduced supply at the exact moment a trade must be made its price will go up. Beyond that, traders
or speculators may assign a premium or a penalty to a currency based on expected changes in money flow caused by gross
domestic product (GDP), inflation, budget debits or surpluses and other macroeconomic conditions.
Fortunately, short-term traders have developed technical analysis methods to track and capitalize on market moves
without access to complete research in the underlying market conditions—and that is the focus of the Online Trading
Academy Forex curriculum. Students learn about Fibonacci-based trades, reversal
trades and break trades and also the management of risk and capital preservation with high-probability strategies.