Forex is short for foreign exchange. Most foreign exchange transactions are simply currency exchanges; though, the type we will be looking at has to deal with exchanges for profit. The foreign exchange market works in much the same way as any other stock trading system; the basic idea is still to buy low and sell higddddddh. The idea of buying and selling becomes slightly blurred within the confines of Forex trading however. In order to make money in the foreign exchange market you’ll need to be able to successfully predict the ebb and flow of worldwide currencies, the conditions that can cause them to fluctuate and how you can benefit from it.
Here are some things that affect exchange rates:
- Instability of a country or region
- Supply and Demand
- Federal or central banks manipulating their own market to increase demand
- Cost of living in that area
- Employment / unemployment percentages
- Enacted / retracted social or reform programs
- Changes in localized industries
- Demand for national / regional chief exports / imports
- Global political actions / scandals
The Forex market is affected by a myriad of factors, almost too many to even consider. For the beginning Forex trader it’s probably best to seek some automated software assistance in order to learn the basics and avoid costly mistakes.
How does Forex come into play with automated traders?
Automated trading software is very useful for those that are new to currency trading. Most automated trading software uses algorithmic data compiled from conditions, trends and studies and then computes a ‘best course of action’ based on these factors. Automated Forex trading works in much the same way as non-forex trading does; the only difference is that Forex trading may require slightly more participation from individual users if they want to do more than simply ‘break even’. People have made a lot of money with automated trading software in the forex market, and it requires patience, determination and a desire to learn. Keep in mind, there are some programs that are better and more reliable than others, so do your research.
What is a demo account?
Brokers are actually the people responsible for providing ‘demo accounts’ to their customers. These brokered accounts (if they allow for automated trading) will only work with a specific platform (Metatrader4 for example); your automated software will be an add-on or plug-in to their operational platform. The purpose of this “demo” account is to give you the ability to learn how to use the software without risking your money. Demo accounts can also provide additional incentives to users such as; building a trading portfolio, and operating under “real-world market” conditions.