How Do You Get Into Forex Trading? | All About Money Online

Forex trading is very popular, but if you are new to trading I must warn you: The Forex markets are extremely volatile, and you can easily make (or lose) thousands of dollars in a day. Many Forex brokers offer “free quotes and charts” and “no commissions”, but keep in mind that nothing is for free: You are paying a spread, i.e. you can NOT buy a currency and immediately sell it for the same amount. It’s like at the exchange booths that you know from your holidays: You exchange $100 into 80 Euro, but when you change the 80 Euro back into dollars, you only receive $96. Same when trading Forex: You are paying at least 2 “pips”. This amounts approx. $20, depending on the currency pair you’re trading. Another disadvantage of Forex trading is that you are NOT trading at an exchange: There is no “Foreign Exchange”. You are trading against your broker: If you are selling, then your broker is buying from you and vice versa. And that’s why your broker is giving you the quotes for free: He can basically give you *any* quote since there are no regulations. Scary, isn’t it? So basically I support kzajko’s answer: Don’t. If you really want to trade currencies, consider trading currency futures. First of all you make $12.50 per pip (instead of approx. $10 in the Forex market), it is regulated and you get good margin rates, too. Don’t fall for “no commissions” and “free quotes”. It’s a sales gag!

Hope that helps.

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