Forex Concepts for a Beginner s’ Guide

Foreign exchange refers to the trading of foreign currency or the foreign country currency. Now a days Forex trading has become more popular because it has big margin of profit. If you are interested in making money from Forex trading you should be well acknowledged with the terms and concepts which are mostly used in Forex market because it has great risk of loss. Some concepts are given here for the guidance of beginners.

Bear Raid

A bear raid is a type of stock market strategy, where a trader try to push the price of a stock down by taking large short positions and spreading unfavorable rumors about the target firm. In a bear raid, the manipulators profit on the difference between the original stock price and the lower price. Bear Tack A downward movement in the value of a stock, sector, or market, or investor sentiment that assumes a fall will happen soon. A bear tack is usually used to describe bearish movement in the short to medium term.

Leverage trading

The ability to control large dollar amounts of a commodity or security with a comparatively small amount of capital. Leverage trading is a common practice in foreign exchange trading also called trading on margin.

Exchange Rate

The price of a currency expressed in terms of other currencies. Fixed exchange rates exist when governments agree to maintain the value of their currencies at pre-established levels. This is also known as the rate at which one currency may be exchanged for another.

Inflation

The overall general upward price movement of goods and services in an economy is known as inflation. It is usually measured by the consumer price index. Inflation causes money to decrease in value at some rate, and does so whether the money is invested or not.

Inflation Risk

Inflation risk is the risk that rising prices of goods and services over time, or, generally the cost of living, will decrease the value of the return on investments. Inflation risk is also known as ‘purchasing-power risk’ since it refers to increased prices of goods and services and a decreased value of cash.

Tips for Forex Trading

Forex trading is different from other trading like stocks or bonds because it involves trading of currency pairs. The currencies having stable and greater values are usually chosen for trading. Trading foreign exchange on margin carries a high level of threat of loss for inexperienced investors due frauds and lack of required knowledge. Even if you are not a professional trader, a little use of the common sense and following suggestions, tips and guidelines will help you in long run.
First of all protect yourself from frauds and always try to stay on the safer side. Take a carefully decision about your trading company or transaction because one wrong decision could seriously put in danger your trading career.

Fraudulent companies often offer high profits for minimal risks to attract you in participating or joining their services. Beware of such companies because the fact is that, higher rate of profit carries higher risk of loss. It is far safer to select a government registered company to minimize the risk of fraud. This is basic provision that will put off any trouble that you might come across in the future.

The success of Forex trading, like other tradings, lies in the rule; buy for less and sell for more so, always buy and sell with the trend to maximize your chances of success. Trading against the trend is not better for new investors because it requires more attention, knowledge and sharp skills to get required trading goals.
Ups and down of forex market depend on political current affairs, economic situation, policy decisions and other factors. Keep an eye on international trade and get updates about what moves in currency markets from different resources like TV and internet.

There are three crucial trading strategies i.e.carry, momentum, and value trade, which are often used by currency traders. You should have complete knowledge about them. Momentum shows the direction of currency markets; the carry strategy sees investors selling currencies with low interest rates and buying those with high rates; and the valuation strategy takes a position based on the investor’s view of a currency’s value. Make sure what type of strategies you should use to be success.
Foreign exchange market has a great risk of loss, it is better to consider as part of a balanced investment selection. Don’t hesitate to take some advice from the ones who have experience of forex trading because you can get knowledge about successful trading from his experience for your own benefits