A Forex Primer — Forex 101

The Forex—or Foreign Exchange—market is the largest, most fluid investment vehicle the world has ever known. Nearly two trillion dollars are exchanged each day across a vast network of computers found in central banks, investment banks, hedge funds, and brokerage firms around the world. This is the most fluid market in the world because it operates 24 hours per day Sunday through Friday afternoon when it shuts down completely.

Around clock trading means that you rarely have problems with
gaps (difference between what commodity closes at and what it
opens at the following day—in stocks, the gap can sometimes be
devastating), this never-ending array of profit-making
opportunities can sometimes lead to over trading—a very costly
mistake because it often defies the logic of most Forex
investment strategies and often leads to missed opportunities
to maximize profit.

Traders in the Forex operate in units known as "lots". A lot is
the equivalent of $100,000 (unless you opt for the "mini" lot)
and you are essentially trying to predict how the exchange rate
between two currencies will fluctuate in the future. While there
are literally dozens of potential pairs, the six main players in
the Forex are:

· U.S. Dollar
· Euro
· Swiss Franc
· Japanese Yen
· Canada Dollar
· British Pound

International corporations and nations must exchange currency
to help finance payroll, secure resources, pay vendors, support
infrastructure, etc. This constant exchange of money is done
based on a rate that fluctuates due to a variety of factors,
including:

· Psychology—fear, greed, and other emotions play a large role
in the markets and can sway rates dramatically; however, human
emotions have always influenced the markets making them
predictable based upon enough data and proper analysis.

· Current Events—with a 24-hour news cycle, events from around
the globe can quickly influence exchange rates and cause
substantial price fluctuations. If investors allow fear
(emotion) to affect their decision-making, then a "sell-off"
panic can set in and artificially deflate exchange rates.
However, the "sell-off" and panic may have been predicted if
caused by historically relevant factors that triggered a
similar trend in the past. Doing your homework is a good way to
judge if current events are truly relevant to the true exchange
rate before deciding to sell.

· Government Reports—Many analysts gauge the economy and the
way exchange rates are trending by a number of reports released
by the government on a periodic basis by a variety of agencies.
GDP, the prime rate, unemployment figures, consumer confidence,
and many other reports have been known to play temporary roles
in the exchange rates between nations.

Many investors in Forex use margin to secure lots and you can
typically secure 1-$100,000 lot for as little as $1,000. It is
not very likely in this day and age of advanced technology and
rapid connections for you to lose more than your investment—the
account will typically be shut down automatically when it
becomes negative but be sure to check with your broker. Small
fluctuations in the market can make a big difference for those
that are highly leveraged so it is best to ask very carefully
about the potential risks when thinking about this option.

While there is no central exchange for Forex traders to
congregate, the market remains a great place to seek
opportunity and profit. However, be sure to research any
investment carefully—especially for hidden costs. Brokers are
not paid a traditional commission—they are actually paid the
difference between the bid and ask price on orders so make
certain that all decisions are made only after careful
research.

About The Author: Article by Kent Douglas, author of "The
Simple Forex Solution: The Easiest Currency Trading System
Anywhere." To learn how you too can succeed in Forex and
Currency Trading, please visit
http://www.SimpleForexSolution.com

John V
Introduction to Forex Trading.
*Why Forex Market is Unique
*Advantages of Forex over Futures or Stocks.
*How to choose the right Forex broker.
*Brokers whom you should avoid.
*How to predict a currency's long-term trends.
*How analysts judge price-trends.
*How Forex spreads operate
*34 powerful tips you MUST read before entering the Forex Market

Just Click Here for more information.

John C. Vincent/CEO/The Opt-In Magic System
http://LawOfAttractionSite.blogspot.com