Day Trading

Trading In Day Time’s Advantage:

Forex traders have the aim of using the small amount of one currency; say the US dollar, to purchase another currency like the British Pound. If supply of the pound lessens in a busy market, it will cost more dollars to buy pounds, and the forex trader hopes to sell their pounds at a higher than their purchase price. In many respects, this type of trading behavior is very similar to trading in stocks, where the aim of nearly all traders is to buy low and sell high.

The trading process works under a bid/ask system. In the above example, a forex trader might bid 100 dollars in return for 57.1 British pounds, and the seller of the pounds could be asking 111 dollars for the same amount of pounds. If the seller accepts the bid, the trader then hopes the pound continues to increase in price, so that when time comes to sell, they can get in excess of the 100 dollars initially paid. As only registered traders have access to this auction process, most online speculators will trade through a bank or broking house. Such brokerages charge a commission for facilitating the trades, and forex traders should consider these transaction costs when calculating their selling offer when time comes to exit their position, as this will affect their profit margin. The global foreign exchange market can trade in excess of a trillion dollars a day. It is neither a guaranteed, nor easy path to riches, so traders should be educated in how to play the market. Instructional packages are available, and should be carefully reviewed as they can easily range in quality and price.