Forex SUPER Tip #1
An Introduction To The Forex Market
"The market price action in forex trading in one week is equivalent to
a month's worth of stock market moves" - world renowned forex expert
Marco Polo
Forex Education 101 – Simplifying A Seemingly Complicated Investment Opportunity
The purpose of this article is
to provide
for the reader an entry-level introduction to the world of foreign
currency exchange.
Forex education can be quite elusive, as there may be a lot of materials available offline and online but all of which can be quite intimidating for novice FX traders who expect simpler terms and simpler methods to follow.
This article aims to simplify forex education into a level that anyone will be able to understand.
First thing’s first: what is foreign currency exchange? Basically, foreign currency exchange involves the trading of currency for profit. Remember when we were kids and we used to trade baseball cards?
We buy them per pack of 10, and when one card rises in value, we sell it for a fortune – or at least, a fortune in the eyes of a kid, right? The same philosophy is at play with forex trading. You buy a particular amount of currency, wait for it to gain value, and sell it for profit.
Often, a currency is pitted against another to determine increase of decrease in value. More often than not, the standard used is the US dollar. The 2 currencies compared side by side are called the currency pair.
Forex trading is a game of speculation, however, predictions must be smart. Hence, forex education focuses on analyzing trends that will help the trader make smart predictions.
There are two types of analytical approaches to foreign currency exchange:
1. Fundamental analysis. This involves studying economic and geopolitical factors that affect the country of the subject currency. A currency’s value depends on the events that shape the mother country’s economy, after all. You will see many forex traders monitoring major news outlets for up-to-the-minute information on the happenings that affect the currencies they have invested on.
2. Technical analysis. This involves reading reports in the form of charts that represent the currency pair’s performance over a period of time. This doesn’t involve monitoring news feeds, which some traders find too onerous. Veteran forex investors can simply look at updated charts for a few seconds and make informed decisions on their investments almost immediately after that.
If we are to summarize forex education in one sentence, then it would have to be this: sell when it’s hot, buy when it’s not. This is the basic rule in every form of investment opportunity, and the same holds true with foreign currency exchange.
Forex education can be quite elusive, as there may be a lot of materials available offline and online but all of which can be quite intimidating for novice FX traders who expect simpler terms and simpler methods to follow.
This article aims to simplify forex education into a level that anyone will be able to understand.
First thing’s first: what is foreign currency exchange? Basically, foreign currency exchange involves the trading of currency for profit. Remember when we were kids and we used to trade baseball cards?
We buy them per pack of 10, and when one card rises in value, we sell it for a fortune – or at least, a fortune in the eyes of a kid, right? The same philosophy is at play with forex trading. You buy a particular amount of currency, wait for it to gain value, and sell it for profit.
Often, a currency is pitted against another to determine increase of decrease in value. More often than not, the standard used is the US dollar. The 2 currencies compared side by side are called the currency pair.
Forex trading is a game of speculation, however, predictions must be smart. Hence, forex education focuses on analyzing trends that will help the trader make smart predictions.
There are two types of analytical approaches to foreign currency exchange:
1. Fundamental analysis. This involves studying economic and geopolitical factors that affect the country of the subject currency. A currency’s value depends on the events that shape the mother country’s economy, after all. You will see many forex traders monitoring major news outlets for up-to-the-minute information on the happenings that affect the currencies they have invested on.
2. Technical analysis. This involves reading reports in the form of charts that represent the currency pair’s performance over a period of time. This doesn’t involve monitoring news feeds, which some traders find too onerous. Veteran forex investors can simply look at updated charts for a few seconds and make informed decisions on their investments almost immediately after that.
If we are to summarize forex education in one sentence, then it would have to be this: sell when it’s hot, buy when it’s not. This is the basic rule in every form of investment opportunity, and the same holds true with foreign currency exchange.
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