Forex Trading: Introduction to Foreign Exchange Trading
The foreign exchange markets are always in a constant state of
flux, and for the budding trader, it can be a rather daunting
place to invest and trade your money. We bring you into the
world of foreign exchange trading. As you look into the
prospect of forex trading you will begin to understand the width
and breadth of the forex market. It is a worldwide market
trading currencies 24 hours a day 7 days a week (Well actually,
markets are actually open for about 5.5days a week actively
trading). As a consequence of this huge market, the market is
highly liquid and high volume takes place daily. As the market
in constant flux there are plenty of opportunities for forex
trading.
Forex trading takes advantage of the constant flux of the
market, buying and selling into and out of the ebbs and flows of
the foreign exchange trading charts. Many profitable trades
await the trader in these markets. So as you examine your charts
as a forex trader you will find that the market display's
repetitive behaviour as well as trends. Trends can go in three
ways; an up trend, down trend and a sideways trend. As a trader
you take advantage of price differences so you ought to stay
away from sideways trending forex markets while jumping at every
chance at up trending (long) markets or down trending (short)
markets.
The important catchphrase in forex trading or any other trading
for that matter is that "the trend is your friend." An uptrend
is simply defined as a set of prices on a chart that display a
pattern of higher highs and higher lows: or put simply a graph
going up from left to right. A downtrend is the opposite to an
uptrend with a pattern of lower lows and lower highs: or simply
put a graph going down from left to right. Then you have your
sideways charts which really doesn't display any clear uptrend
or downtrend and shows up as either an erratic pattern of highs
and lows or a pattern where the price doesn't really change much
between the highs and lows.
Foreign exchange trading takes advantage of trends and the price
differences at which the traders buy and sell the foreign
currencies. It is a highly valuable skill to master the ability
to read charts and to be able to see the uptrends and downtrends
as well as the sideways trends in any chart or market you
examine. Remember, the trend is your friend, ride the trend and
you shall have your profits. As profits are the main objective
of any forex trading venture.
This article "Forex
Trading: Introduction to Foreign Exchange Trading" can be
found in our Foreign Exchange (FX) Markets category.