What is Forex and How to make money with Forex 2

What is Forex and How to make money with Forex 2

In Ideas on How to Become Rich, we have now explored a new fields, called foreign exchange, and we will be looking into forex for ideas on how to make money and become rich.

Forex is basically the trading of currencies, and the trick is to make use of the discrepancies in currency values and prices in order to make money. Conceptually, that's easy enough for using forex to become rich, but there are of course many complicated technical details.

This section may get a little boring because it does not dive into forex right away but deals with terms and words associated with forex. All research is mine and I utilised the following resources on forex because I knew little about forex before researching into it on a major scale. Education is key to understanding forex as it is indeed a viable way to make money and might be the key to your financial success. The best educational resources for forex, and for beginners to forex, are:

articles on ezinearticles.com , of which one of the contributors to other financial and investment articles apart from forex, is myself (yours truly) and http://www.babypips.com/school/the_skinny_on_forex.html for complete beginners.

I do the research and the writing and the synthesis to save you time and effort, and then you can access the information and resources to make money and ideas all here on my website. My advice for beginners to forex is that the ezinearticles are only worth reading once you have learnt and mastered the basics, because most of them are actually advertisements for online programmes and other types of software that help you make money doing forex. That is to say: know what forex is first, learn all you can about forex, and learn strategies and moves for success in forex, and then currency trading will be a money spinner and money earner for you. Then read ezinearticles.

Definitions and terms associated with forex

long = buy
short = sell

These two key terms are the basics of forex that you definitely need to know.

the bid = the price at which you will sell
the ask = the price at which you will buy

the spread = the difference between the big and the ask

rollover = this depends and varies from firm to firm, but the main thing is: there is a rollover interest rate that a trader either pays or earns

demo trading = doing trading using a fake account that simulates a real account for forex

pip = the most common increment of currencies, the last decimal place of a quotation - don't worry, all forex brokers will do this calculation for you, and besides my brother doesn't know what a pip is either!

lots = forex is traded in lots, where a lot is $100,000 normally - you might have to confirm this as it may vary from country to country

margin = also known as the account margin, this is a minimum forex account size

margin call = the broker will call you when your account falls below margin requirements, so that you have to put up the difference

market order = order to buy and sell at the market price

limit order = order to buy and sell at a certain price

stop-loss order = is a limit order linked to an open trade to prevent additional losses

GTC = good till cancelled order - active in the market till you cancel it

GFD = good for the day order - active till the end of the trading day for forex

OCO = order cancels other order - a mixture of limit or stop loss orders

More to come on forex and how to make money with forex in future posts here on Ideas on how to become rich.