Define Currency Trading
What is “currency trading”? According to mib700.com, it can mean a lot of things to many people. It all depends on who you are talking to. To put it in a nutshell, you are buying and/or selling different types of currencies from around the world. They are typically done in pairs. Some currencies are worth more than others. Any trader who is looking to get into this needs to do their research. Know the risks. Know the benefits. Know everything before begin. Trading platforms can and will rob anyone blind, especially those who do not know what they are doing.
How Does It Work?
According to Mib 700, it is the rate for which one currency can be exchanged for another. They usually work in pairs, as Mib700.com stated above. One pair you will see a great deal of the time is the EURO/USD. This stands for the European currencies versus the US dollar currencies. Each one is going to fluctuate from time to time. It all depends on the inflation rate and geopolitical events. Industrial factors can also play a role in what happens with the currencies.
“All it represents is the amount of US dollars one Euro can buy. Say you believe that the Euro will increase against the US. You buy these with the US dollars. Say you get a win out of the increase. You sell the Euros back to the bank making a tidy little profit. The opposite can happen too. This means you have to sell everything back by taking a loss or a hit”.
Mib700 staff spokesperson
Why Do Trades On This?
This is a question Mib700 gets asked a lot. There are 5 good reasons to trade currencies. Keep in mind there is a difference between the forex and equity markets.
1) Most firms do not ask for commissions on this. You only pay out for a bid or ask spread. It is not to say that some firms will not ask for a commission. Some will. The commission ratio is about 80/20. The higher mark indicating the firms that will not ask for a commission.
2) There is a 24 hour window. You can buy and sell when you like. Double check on this though. Some windows do not stay open through the period of Saturday-Monday.
3) You can use leverage to your advantage on this. This strategy is only suggested for those who are not beginners. Using leverage can and will increase the potential for a win and loss to occur. The more leverage you use, the more of a loss you may take. Same thing happens on a win. Use at your own discretion.
4) You only need to pull from and focus on a small selection of options. Other stock options can give you close to 5,000 or higher. This is good for those who become too overwhelmed in short period of time.
5) You do not need a huge amount of money to begin. This is what makes this type of forex trading so easy and accessible. You will not feel as though you are over your head.