Day Trading Forex Market Behaviour by:Jay Moncliff
Technology advances like the internet have spawned a new craze
, where anyone with a secure internet connection prepared to undertake a small amount of training can engage in trading foreign exchange on the forex market.Just as a day trader will closely track stock price movements on the Dow Jones Industrial Average, all over the world forex traders monitor currency fluctuations in a similar fashion.
Forex traders have the aim of using the smallest amount of one currency, say the US dollar, to purchase another currency like the British Pound. If supply of the pound lessens in a busy market, it will cost more dollars to buy pounds, and the forex trader hopes to sell their pounds at a higher than their purchase price. In many respects, this type of trading behaviour is very similar to trading in stocks, where the aim of nearly all traders is to buy low and sell high.
The trading process works under a bid/ask system. In the above example, a forex trader might bid 10 dollars in return for 5.7 British pounds, and the seller of the pounds could be asking 11 dollars for the same amount of pounds. If the seller accepts the bid, the trader then hopes the pound continues to increase in price, so that when time comes to sell, they can get in excess of the 10 dollars initially paid.
As only registered traders have access to this auction process, most online speculators will trade through a bank or broking house. Such brokerages charge a commission for facilitating the trades, and forex traders should consider these transaction costs when calculating their selling offer when time comes to exit their position, as this will influence their profit margin.
The global foreign exchange market can trade in excess of a trillion dollars a day. Sheer market size means there is considerable money to be made, and lost, through miscalculation. It is neither a guaranteed, nor easy path to riches, so traders should be educated in how to play the market. Instructional packages are available, and should be carefully reviewed as they can easily range in quality and price.
About the author
Jay Moncliff is the founder of http://www.forexadvise.info a website specialized on Forex, resources and articles. This site provides updated information on Forex. For more info on Forex visit: http://www.forexadvise.info. Sales 101 by:Sue and Chuck DeFiore E-gold Investing: Make Money With Currency Trading by:Charles Cruz The Dangers Of Thinking Too Big And Too Broad by:Jason Tarasi Be Ready to Answer the Top 10 Job Interview Questions by:Linda Matias How To Run Stress-Free Events by:Lorraine Pirihi Using Business Computing To Grow Your Company Or Get Your New Company Off To The Right Start For The New Year! by:John Maier The Credit Agency: A Guide to Credit Management, Debt Collection, Outsourcing, UK Credit Reports for Business by:The Credit Agency E-Currency: If Forest Gump Was Here, This Is What He Would Be Doing by:Charles Cruz Are You A Shoulda, Coulda, Woulda? by:Sue and Chuck DeFiore Don't Give Up on a Job You Want by:Scott Brown Australian Superannuation. Hot Tips to Grow Your Super. by:Tony Kent and Cathy Howley The Online Mortgage Application Is The Best Option For Good & Bad Credit by:Carrie Reeder Practice Professional Business- Get impressive Results by:Abe Cherian