The Basics of Foreign Exchange (For Beginners)

Filed under: Learn Forex Trading |

Screen shot 2013-06-17 at 09.43.28In the modern era, the vast majority of people have now travelled abroad for a holiday or other business, and as such, the vast majority of people have also at some point or another, exchanged currency. In effect, most people have already participated in trading forex without even realising it. However, for the purpose of a holiday, few people consider the fluctuations in foreign exchange quotes, and simply exchange money as and when they need to – regardless of the rate. Other more savvy travellers wait for a favourable rate before exchanging their money, but there is often not a great deal of strategy in this, probably because the amounts changed are relatively small, and the fluctuations do not make a huge difference to people on such a small scale.

 

When you change money in this way as a traveller, the same principles apply as when you trade vast sums in the forex market via a broker. Your high street bank or money exchange bureau will act as the broker, and they will give you both a buy and a sell price, with the difference between these prices known as the ‘spread’. If you get a quote online for an exchange rate (from somewhere such as www.xe.com), you will often get the ‘mid’ price, which is the price midway between the buy and the sell price – which can often be confusing for people when they later get a more unfavourable rate.

 

However, by learning the basics of technical analysis, you could time the exchange of your foreign currency and get more favourable rates when you go on holiday, and if you find that you have a talent for this, then perhaps you should be dedicating your free time to trading the forex markets! Trading can be a fun and challenging occupation for the right people, and you can learn much about trading the forex markets right here at Forex System Reviews.

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