Forex trading is also called Forex trade or currency trading or currency trade. Forex trading includes selling and buying of currency with another organization or party. The combination of the two currencies used during the Forex trade is called the cross. For example, there can be a financial transaction of exchange of Eros for Dollars. The most common currencies used for Forex trading are EUR/USD, USD/JPY and GBP/USD.

The most important market in terms of Forex trade is the spot market. In the spot market you can see the largest volume of financial transactions happening every single day. The market is named as the spot market as all the transactions take place on the spot such as two banking days maximum. Forex trading offers a lot of advantages. You can trade for 24 hours a day from Sunday to evening of Friday. The Forex market is also known as the most liquid market in the world. There is always a presence of sellers and buyers in Forex trading. The liquidity of the market ensures that are narrow spreads and stability of price.

The liquidity is available through various financial organizations such as individual investors, market players, banks and companies. You can even gain a position that is 100 times the actual position through gearing. Hence you can command a price of 5,000,000 USD when your actual position is 5000 USD and this can be done only through gearing. Even a first timer in the market finds Forex trading very interesting. In majority of the cases there are no commissions involved when trades are carried out. This is because the financial transactions are directly carried out between the buyer and the seller. Today Forex trade can be done online on many popular financial sites. You can just open an account and start trading. However you should read all the terms and conditions of the site before starting Forex trade.

Forex trade helps to provide a lot of opportunities to everyone around the world. This is because the market has constant volatility. The currency is continuously becoming weak or strong against another currency. Hence if the EUR/USD reduces then it means that the EURO has become weaker than the US dollar. Hence if you think that EURUSD will decrease then you should begin to sell the EURO and buy it later at a low price. Forex trading is the biggest financial market in the world. The daily turnover of the Forex market is about 3.2 trillion dollars on an average. Even the daily volume of the bond and stock markets is negligible when it is compared with the Forex market. The Forex market has become very popular market in the last few year due to several reasons such as high liquidity, no commission policy and 24 hours trading online.

The large commercial banks do the major part of Forex trading. Investing in foreign exchange is a forte for these banks. The Forex market is very much similar to the equity market. However there are some differences as well. You can even do Forex trading through a well know Forex broker. When you go for Forex brokers you should give special attention to low spreads. The spread is the difference between the price at which the currency is bought and sold at any given point of time. You can also compare brokers to find out which one is the best and who will also assist you well. The Forex brokers are usually tied up with the commercial banks and other financial lending institutions. It is compulsory for the Forex brokers to be registered with the Futures Commission Merchant. He should also be regulated by the Commodity Futures Trading Commission. Find out if your Forex broker is backed by a strong financial institution. Today the Forex brokers have many types of trading platforms just like the brokers in other markets. These trading platforms maybe based on the technical analysis tools, real time charts, real time news and even trading systems support. Before finalizing the broker you should test his performance on these different types of trading platforms. Brokers provide many services based on economic calendars and fundamental commentaries.

There are also a wide range of leverage options in Forex trading. Leverage is a necessary part of Forex as the price deviations are merely fractions of a cent. Leverage is expressed as a ratio of the total capital and the actual capital and it also the amount of money that the lender will give you for trading. For example, a ratio of 100:1 means that he would be able to lend you a 100 dollars for every one dollar of actual capital. There are many brokerages that can go as high as 250:1. A lower leverage means a lower risk when it comes to a margin call but at the same time it also gives you a lower bang on your buck.

Hence if you have every limited capital then you should make sure that your broker offers you good leverage. A broker with a good capital advantage will be able to give you many types of leverage options. Hence you can then vary the amount of risks when you have options in hand. The Forex brokers can give two or more account types for Forex trading. The smallest account is called the mini account and you can trade with a minimum amount of about $250. This can offer you a high amount of leverage. Then there is the standard account that lets you deal with several leverages but you may have to invest an amount of about $2000. Finally there are the premium accounts which require significant amounts of capital with additional tools and services that you can make use of. Also you can get to use different amounts of leverage.

There are certain things that you should avoid in Forex trading. You should definitely try to avoid hunting and sniping. This is the selling or buying near preset points. These fraud acts are normally done by brokers to increase their profits. However there is no broker who will admit that he has committed these acts. Also there is no organization that watches over these activities and blacklists them. Your broker will let you know how much risk you can take when you are trading with borrowed money. As he can buy and sell on your behalf at his discretion.

The procedure for getting a Forex trading account is very much similar to getting an equity account. However in case of Forex accounts you have to sign a margin agreement. This agreement mentions that you are trading with borrowed money and hence the broker has the right to interfere with your trades and carry them on your behalf. Once you sign up for a Forex account, you can simply deposit money and start trading in that account.

In Forex trading, a trader should make a proper use of fundamental analysis and technical analysis. However Forex traders make the most use of technical analysis. In Forex market the fundamental analysis is very complex and it is used to predict long term trends. There are meetings held in case of fundamental analysis to discuss various points such as interest rates, inflation and several other issues. The fundamental analyst in the Forex market can simply read the reports which give them a better understanding of the market. The technical analysis on the other hand helps to analyze price trends. The time frame is the only difference in the technical analysis and the fundamental analysis in the Forex market. The most successful Forex traders devise a strategy and stick to it over a period of time. Some traders focus on a particular study or theory while others concentrate on the broad spectrum analysis to finalize their trades. Experts suggest that you should use a combination of fundamental analysis and technical analysis. This way you can make long term projections and also decide the entry and the exit points. However in the end it is the individual trader who will decide what works best for him.