The three essentials to starting FX trading PDF Print E-mail
Written by David Choice   
Friday, 08 April 2011 13:07
Forex (FX) or currency trading is the most valuable market in the world and it's equally popular among large corporations as it is with private investors.
by DavidChoice


Forex (FX) or currency trading is the most valuable market in the world and it's equally popular among large corporations as it is with private investors.

More and more private investors start trading forex each year and some make basic mistakes, here are a few key points to remember when you start.

What are currency pairs?

The following currency pairs: EUR/USD (Euro/US dollar), GBP/USD (Pound/US dollar), USD/JPY (US dollar/Yen), and USD/CAD (US Dollar/Canadian dollar) are known as the 'majors'.

Examples of 'exotic' pairs would be EUR/CZK (Euro/Czech koruna) and EUR/MXN (Euro/Mexican peso).

If you want to start forex trading it's recommended you choose a currency pair you are familiar with and learn everything you can about its relationship with other currencies.

The relationships between all currency pairs can be quite complicated so it's important that you learn as much as possible about your chosen pair.

Choose how you will access the markets

Private individuals have three different types of forex provider to choose from.

One of these three is currency futures which offer fixed contract sizes and require a relatively large stake per contract. Futures are traded on the Chicago Mercantile Exchange.

Another of these is margined forex trading accounts. These tend to be more attractive to retail forex traders as they offer the ability to trade on margin which is agreeable to the private individual who will have less capital than an institution.

Financial spread betting is an additional way to take advantage of the forex markets. Spread betting is again done on margin, offers low bet sizes and is tax-free in the UK.

Choose a reliable provider/platform

As forex trading has boomed in popularity among private investors so has the number of forex providers increased.

It's important to choose a provider that's been around awhile and has a good reputation and a robust forex trading platform.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

See spread betting explained at IG Index's site. Where you can also find out all about forex and what it can do for you. Spread betting can result in losses as well as profits so make sure you understand the risks involved.