Forex Trading For Extra Cash
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If you are looking for a money-making hobby akin to the stock market, then the Forex market could be what you are looking for. Forex is an acronym of 'Foreign Exchange' and is sometimes written as FX. The Forex market deals with all the currencies of the world and their correlation with each other. The Forex operates on a similar basis as the stock exchange. However, Forex is not the same as a stock exchange in that it is a global market working 24 hours a day, 7 days a week. For example, the NASDAQ, the DOW or the FTSE are only concerned with firms that are active in their own country and are only accessible to most people from 09:00 until about 16:30 local time. Therefore, stock exchanges are far more restricted than Forex. Forex deals normally amount to trillions of dollars every day of the week and you can choose which currencies you want to specialize in: say, the USD against the GBP, written as USD-GBP or vice versa. The major currencies are USD, JPY, GBP, CHF, EUR, AUD, NZD and CAD The bet that you will be making is the rise or fall of one currency against another. For example, you may think that the GBP has fallen enough against the dollar and that once the election is over and there is less political ambiguity, the GBP will rise against the USD. That would be your bet. You may think that the Iraqi war will end soon and that the Iraqi currency will then rise against the dollar. Again that would be your bet. There are many trading strategies that you should learn over time, but if I included them in this short article, I would not be able to do the strategies justice. If you want to examine Forex trading, you should get hold of a specialized book on the subject. However, one of the most essential concepts or strategies in the Forex market has a counterpart in stock exchange trading: that is the stop-loss. The stop-loss is an instruction that you put with your Forex dealer that if you begin losing money heavily, they will automatically sell your positions (bets) for you. This is effective if you make a serious error of judgment or something unforeseen occurs, like a terrorist bomb or a revolution. The downside of a stop-loss limit is that it consolidates a loss. The loss is there, written in stone, whereas if you keep the bet open, it may recover. Because it is easy to lose money and lots of it very quickly, it is wise to only gamble with money that you can afford to lose. Some Forex trading firms permit quite small minimum bets, but you have to take into account the cost of placing the bet. The Forex trading company may charge 1% of the bet or a fixed rate like $10 per trade. This will influence the minimum bet that it is worth laying. Therefore, some research is necessary before placing a bet. First you research the countries concerned and then you, work out how much the currencies will move and then you add on the cost of the bet. That will tell you how much the currency has to rise before you make any money.