Forex trading involves a significant degree of risk.
Foreign exchange market, also known as Forex or FX market, is an over-the-counter (OTC) interbank market that allows big banks and brokers to exchange currencies. The 'retail' Forex market is a foreign exchange market that individuals can access through a large number of online brokers. It differs from the interbank market in that its prices are not as good as those offered for banks and other large market participants.
'Off-exchange' suggests that Forex trading is not done on any centralized exchange such as the New York Stock Exchange (NYSE), but instead is conducted over secure computer networks.
Trading foreign exchange with an online broker demands high discipline and a good knowledge of currency markets.
Instructions
1. Open an account with an online broker. There are a number of well-established foreign exchange brokers, including Oanda.com or Saxo Bank. Make sure your broker has low spreads--differences between the market buy (ask) price and sell (bid) price. Also inquire about whether the broker has any commissions or charges, for example, when you withdraw funds from your account.
2. Research how foreign exchange-trading works. Read books on the subject, preferably written by star Forex traders and investors. For up-to-date information, acces business news agencies such as Bloomberg or Thomson-Reuters.
3. Devise your own trading strategy. Your strategy can be based on a a number of factors: technical analysis (analyzing charts), analysis of interest rates and central banks' policies, expectations about speculative capital flows, and other factors. Be disciplined and don't diverge from your strategy.
