Introduction:
Despite its size, the foreign exchange (ForEx) market seems to be relatively unpopular compared to other financial markets. Even if they wanted to, getting started often proves more difficult than it sounds. This report I propose will describe to aspiring traders the basic steps that need to be taken to get started trading foreign currencies through an online broker.
While there are several reasons one may get involved in trading foreign currencies, the uniqueness of the ForEx market is what makes it so appealing (or unappealing) to some. First, it is important to note that ForEx is by far the largest financial market in the world; some days, the daily turnover exceeds $4 trillion (source). To put it in perspective, the New York Stock Exchange (NYSE) only averages a daily turnover of about $50 billion. This enormous turnover causes the market to be extremely liquid, meaning that prices are constantly fluctuating twenty-four hours a day. That’s right, the ForEx market is open to anybody in the world with Internet access twenty four hours a day, five days a week (excluding weekends). Meanwhile, the New York Stock Exchange, for example, is only open for trades during American business hours, Monday through Friday. This vast trading period provides more opportunities for the investor to trade. A final advantage, or disadvantage, to the ForEx market is that usually ForEx brokers offer much more leverage than other markets. Leverage involves borrowing a certain amount of money needed to invest in something.
In the end, the underlying goal of trading foreign currencies boils down to earning a profit; often, successful traders are able to make enough profit to call it a career. By the end of this manual, the reader will have sufficient knowledge as to how to begin trading foreign currencies through an online broker.
