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Important and Basic information for Beginners to learn Foreign Exchange Trading

By Jane Cyrus Subscribe to RSS | February 13th 2012 | Views:
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. It doesn’t matter whether you are an international bank or an individual because the motive of trading for all the persons remains the same to earn more profit in short time span.

Every nation has its own individual stock market but the overall trading market is very big in size and huge amount of money has already invested in this market by the traders. The basic and fundamental thing lie behind this trading is buying and selling of currency pairs, so that the cost of their currency increase in order to earn more and more profit. The most common pairs is US dollar versus Euro i.e. USD/EUR. And the opposite pair of this pair is Euro versus US Dollar i.e. EUR/USD. The values of these pairs always show opposite results. If value of EUR/USD increases then the value of USD/EUR decreases and vice versa. The main purpose of the traders in this Forex market is to purchase at lower rates and sell at higher rates. In this way Forex trading occurs.

Money Supply rate and interest rate is totally controlled by the central bank and these all are located in New York, London and Tokyo. These are the locations where FX trading is done at large scale. Many of the transactions and trading whether large or small is done with banks. Trading done between banks is known as interbank trading. After the full day investments, banks get engaged in trading with this money in order to have more money for the next morning. If they get success, they get more options to lend more money for the next day.

Many natural events like tsunami, earthquakes and floods immediately affect the value of the currencies. As the value of one currency goes down, the value of its opposite currency goes up. If value of US dollar goes down or weak, then it simply means that the value of opposite Euro currency will definitely become strong and goes up.

If you are an individual investor, you have to keep in mind two things: Firstly, try to make all the decisions yourself. It is very difficult and risky for the beginners. Secondly, follow the professional trades. You can follow these principles for the good trading as it has been realized that an individual can earn better profit as compare to the banks.

Jane Cyrus - About Author:
Forex trading or Foreign exchange trading is not for those people who cannot suffer losses because it’s a business of huge risk.

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