The Forex Market Tutorial - Investopedia

(Page 1 of 30) Copyright © 2010, Investopedia.com - All rights reserved. The Forex Market Tutorial http://www.investopedia.com/university/forexmarket/default.asp Thanks for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www.investopedia.com/contact.aspx Table of Contents 1) Forex: Introduction 2) Forex: What Is It? 3) Forex: Reading a Quote and Understanding the Jargon 4) Forex: Benefits and Risks 5) Forex: History and Market Participants 6) Forex: Economic Theories and Data 7) Forex: Fundamental Trading Strategies 8) Forex: Technical Analysis 9) Forex: Ready To Trade? 10) Forex: The Conclusion Introduction Foreign exchange (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, trading in the forex market had been the domain of large

financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse. Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many speculators rely on the availability of enormous leverage to increase the value of potential movements. In the forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for FX traders. Investopedia.com – the resource for investing and personal finance education. This tutorial can be found at: http://www.investopedia.com/university/forexmarket/default.asp (Page 2 of 30) Copyright © 2010, Investopedia.com - All rights reserved. Extreme liquidity and the availability of high leverage have helped to spur the market's rapid growth and made it the ideal place for many traders. Positions can be opened and closed within minutes or can be held for months. Currency prices are based on objective considerations of supply and demand and cannot be manipulated easily because the size of the market does not allow even the largest players, such as central banks, to move prices at will. The forex market provides plenty of opportunity for investors. However, in order to be successful, a currency trader has to understand the basics behind currency movements. The goal of this tutorial is to provide a foundation for investors or traders who are new to the currency markets. We'll cover the basics of foreign exchange, its history and the key concepts you need to understand in order to be able to participate in this market. We'll also venture into how to start trading currencies and the different types of strategies that can be employed. What Is It? The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy...

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