How to Trade Forex: A Beginners Guide to Trading Forex

LONDON, April 24, 2012 /PRNewswire/ --

Learn how to trade forex using the following guide for those new to trading forex. Looking closely at forex trading provider, City Index; you will receive an easy-to-digest overview of trading forex and its key features - such as leverage.

Forex Trading

Trading forex is the act of simultaneously buying one currency while selling another for the purpose of speculation.

Commonly referred to as foreign exchange, forex or simply FX; forex trading sees investors exchange one currency for another at an agreed exchange price with forex trading provider City Index.

As one of the worlds' most traded markets, it has an average turnover in excess of US$4 trillion daily; when compared to the New York Stock Exchange - whose turnover is around US$50 billion per day - it is easy to understand the popularity and impact this market has.

Forex Prices

A reason for its popularity could be the numerous opportunities it offers investors due to its high liquidity feature.

As one of the most liquid markets available, forex market spreads tend to stay tight throughout most of the day - leaving traders safe in the knowledge that positions and orders can always be executed and at tight spreads.

Key factors that influence forex prices are: 

• Political and economic stability
• Monetary Policy
• Currency intervention
• Natural disasters (earthquakes, tsunamis etc)

Trade 24-Hours a Day

Investors looking to trade the opportunity as they see it can do with forex as it is a 24-hour market. Popular with an array of traders, the forex markets offer investors the exposure they so desire.

Trading from Sunday evening through to Friday night, trading follows the clock; opening Monday morning in Wellington, New Zealand; progressing to Asia - spearheaded out of Singapore and Tokyo, before moving to London and coming to a close in New York on Friday night at 16:00 EST (21:00 GMT). 

Forex Leverage 

Forex leverage requires investors to make an initial deposit which is only a small percentage of the full value of their position.

With City Index, investors can benefit from a trade leverage ratio from a scale of 20:1 (5%) to 400:1 (0.25%).

In turn, this means that their profit (and loss) potential is significantly higher than in traditional trading. With this in mind; investors are urged to fully research and analyse their chosen currency pair, prior to placing a trade - and also making sure to utilise risk management tools such as stop loss orders to limit potential losses.

Summary

FX trading with City Index opens up opportunities for traders wanting exposure to the largest financial market in the world.  

However, it is important to remember that trading on leverage carries high risk and the possibility exists that you could lose more than your investments, making it unsuitable for some investors.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.