Trading stocks and Forex online - The basics

Trading stocks, foreign currency or property is one of the most lucrative undertakings globally.

Limited company stocks, foreign currency and property are commodities whose values change frequently depending on events in the political and economic scenes among many other reasons. This frequent change in value is what creates an opportunity for trading in these commodities.

Traders study the trends in the market and the environment and speculate whether a commodity will or will not rise in value. They then make a decision either to buy or sell a commodity. They would buy a commodity whose value is depreciated but have a potential to come back, and would sell a commodity whose value is high but is expected to drop. Thousands of people have built very successful business  trading stocks and  foreign exchange.
The rate at which one currency converts to another is never static. If you understand what influences the rise and fall in value of currencies, and if you are able to predict when this changes are likely to happen, then you can earn a lot of money buying and selling this currencies at appropriate times. For example in Kenya in March 2011, the shilling exchanged at a rate of 84 Kenya shillings for one dollar. But in June 2011 about three months later, the shilling was exchanging at a rate of 88 shillings for one if a trader bought the dollars in March, S/he would have sold them in June at a profit of 3 shillings per dollar. How much is that if you are talking of 10000 US dollars.

The foreign exchange market is very volatile; the value of a currency can change several times in a day, to venture into this field without a sound understanding of how it works is suicidal. But as most traders would tell you, the best training is experience. Nonetheless, there must be a basic training before you can successfully venture into this.

 Some people will argue that FOREX trading can be self-taught, in a s much as I agree, terms like bids, PIPS will be mentioned in a passing manner in FOREX trading circles, if you are ignorant of this terms you surely will be lost. I have defined a few of the terms below. With the numerous free FOREX training platforms online, it won’t take a dedicated person long before s/he becomes a pro. However, software like the fool proof FOREX blue print will give any amateur trader a head start in this industry.

Forex trading terms
  • Bid – the price you sell at 
  • Ask –the price you buy at. The Ask is always higher than the Bid. 
  • The spread is the difference between the Bid and the Ask The spread is the cost of doing business. PIPs (Price Interest Point)-this are the forex prices and profits Mini contract is a 10,000 currency purchase.

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