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Getting_Started_In_The_Forex_Market

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					Title:
Getting Started In The Forex Market


Word Count:
550


Summary:
The Forex market is known to be a very lucrative market, with trillions of dollars exchanged daily. To get
started in the Forex market and make the most of your investments in it, you need to select a suitable broker.
Forex brokers do not charge a commission, but generate their income from the difference in the sale and
purchase price of currencies at any given point of time. This difference is referred to as the ‘spread’, and is
calculated in ‘pips’. To save money, choose a ...



Keywords:
stocks, shares, invest, charges, costs, increase, price, profit, market, trade, forex



Article Body:
The Forex market is known to be a very lucrative market, with trillions of dollars exchanged daily. To get
started in the Forex market and make the most of your investments in it, you need to select a suitable broker.
Forex brokers do not charge a commission, but generate their income from the difference in the sale and
purchase price of currencies at any given point of time. This difference is referred to as the ‘spread’, and is
calculated in ‘pips’. To save money, choose a broker who offers lower spreads on your Forex investments.


Select an appropriate broker


While in the equities market brokers function independently, in the Forex market they are usually registered
with banks and other kinds of lending institutions. The reason being, these brokers require large amounts of
capital to process Forex transactions. Forex brokers must be registered with the Futures Commission
Merchant (FCM), and they come under the purview of the Commodity Futures Trading Commission
(CFTC). To ensure that you are dealing with the appropriate Forex broker, you can check his or her website,
or that of the organization where the broker is registered. It will be worthwhile if you select one who offers
additional services, such as technical analysis software, real-time Forex charts, up-to-date news and data,
and online technical support. You could request your broker to provide a free trial, for a limited period, to
check the efficacy of these services.


The next step is to open a trading account with your broker. The minimum amount required to open it differs
according to the various kinds available. Essentially, it ill depend on the amount of capital you have, and the
average amount you intend investing in the future. For example, a mini-account may require a minimum
investment of about 250 dollars, depending on the broker. Premium accounts are also available, which may
require you to trade with a minimum of around 10,000 dollars or more, again according to the broker. Mid-
range accounts, which fall between one to two thousand dollars, are considered the best for small investors.


Conduct fundamental analysis


Since envisaging the future economic scenario of the whole country can be uncertain, it is often very
difficult to accurately predict the future value of a currency. However, you can use some of the economic
indicators available, such as Non-farm Payrolls, Purchasing Managers index (PMI), Consumer Price Index
(CPI), volume of retail sales, durable goods turnover, and others to get a general idea about a country’s
existing economic status, and its future prospects.


Conduct technical analysis


Currency price fluctuations occur due to changes in the demand-supply scenario. To predict the future
course of a currency, you need to examine the prevailing price trends by using technical analysis tools like
the Elliot Waves, Fibonacci studies, Parabolic SAR, and Pivot Points. Since some technical analysis tools
are time based, a few modifications will be necessary to suit the requirements of the Forex market, which
operates round the clock.


The turnover generated by the Forex market is the largest amongst any other market, making it the most
attractive investment destination for many people. You need not be a financial wizard to succeed in the
Forex market; all you need is a basic familiarity of how the market works, and the patience to overcome the
usual initial glitches.




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posted:7/23/2011
language:English
pages:2