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Thursday, January 6, 2011

FX TRADING

Happy new year to all the followers of this blog. How was your long christmas & New year vacation?Last time i started talking on Fx trading & i'll continue from where i stopped. Now that you know that the Fx market is not gambling, how then can you now explore the market & make profit like any buying and selling business? First you need to familiarise yourself with the market structure i.e how do prices fall and rise, what makes prices fall or rise,what to do when price is falling or rising and most importantly how to identify when price is about falling or rising. Secondly, it is very important to understand the concept of money management i.e how to effectively allocate resources (capital) to maximise profit and minimise cost(lost).The beauty of the Fx market is that you can learn how the market works life & not just past records even without you committing your capital, this is possible using virtual trading account, the only difference with the life account is that the money in the virtual trading account cannot be withdrawn.How do prices fall and rise? For us to say the price of a particular currency is falling or rising, it has to be in comparison with another currency else we can't say the price of a currency has fallen or risen. So we can say the price of Euro has fallen against the price of Dollars if the exchange value of Euro is less than the value of Dollars e.g Euro/Dollars =1.0000/1.2000 and we can also say the value of Euro has risen against Dollars if the exchange value of Euro is greater than Dollars e.g Eur/Usd =1.0000/0.9999.Note that when the price of Euro fell against the price of Dollars, then conversly the price of Dollars rose against the price of Euro and vice versa for the other example. It should also be noted that the fact that a currency is falling in relation to one currency does not mean it is not rising in relation to another currency... Next time we will talk on what makes the prices to fall and rise, and what to do when price is either falling or rising. For now you know how price fall and rise. Cheers

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