Forex Trading FAQ

Foreign exchange, or Forex, trading is basically the buying and selling of foreign currencies. It may seem a bit strange just buying and selling money, instead of some physical product or service, but it's just like traveling to another country. You exchange your money for the currency of the country you're travelling to and when you return home, you exchange it back.

And depending on what the exchange rate is for these two transactions, you can either make a profit or loss on the overall exchange. Forex trading is similar, it justs exchanges currencies for the purposes of making a profit on the sale.

It sounds easy enough, and it is possible to make a good steady income from Forex trading. But you need to understand the forex market and learn some trading skills if you're serious about making it work for you.

1. When can currencies be traded? One of the biggest advantages of the Forex market is that it is able to be traded 24 hours a day, 5 days per week. The trading day begins in Sydney, Australia and progresses through markets around the world until it reaches New York, which is the last market to open each day. The market opens each day of the business week, closing only on the weekend and public holidays.

2. What currencies can be traded? Almost every country has its own currency, but on the Forex market, it's only the major currencies that are traded. Major currencies are from nations that are politically and economically stable, and include the Canadian dollar, US dollar, Australian dollar, Euro, British Pound, Japanese Yen and Swiss Franc.

3. Who can trade in forex? Even though the majority of all trading is done by corporate financial companies and multinationals, anyone can trade in Forex. The Forex market is worth about $3 trillion, so there's plenty of opportunity to get in on the action.

4. How do I get started? All you need to get into Forex trading is a computer with a high speed internet connection, a broker and some money to get started. Most importantly though, you will need some training or practice on a demo account before you risk real money. Forex trading is risky, and you can lose a lot of money if you don't know what you're doing.

5. Do automated trading systems work? Automated trading robots can work, but you really need to do your homework to find the one that is right for you. Robots greatly assist your trading by being able to trade for you when you're at work, but you must monitor their performance regularly to make sure they are getting results. Realise that Robots aren't foolproof and you can lose a lot of money if you have a bad Bot.

6. So can you really make money trading forex? Yes you can make a lot of money trading forex, but you can also lose a lot of money. The key thing is to never risk more than you're prepared to lose, learn the trade, find a trading system that works for you and stick to it. Be disciplined in your approach and keep the emotions out of it.