Posts Tagged ‘foreign exchange’

Bforex – A Forex Primer

March 14, 2011

As an award-winning foreign exchange broker, Bforex maintains an intimate first-hand knowledge of the foreign exchange (forex) trading market. As Director of Business Development at Bforex, Pablo Soria De Lachica oversees international currency trading operations, and answers the following questions about forex trading for beginners.
Question: Can you briefly explain the foreign exchange market?

Pablo Soria De Lachica: Currency exchange rates fluctuate regularly. In the foreign exchange market, traders buy and sell the currencies of different countries in order to capitalize on those fluctuations and make money.

Question: How does one make money on the foreign exchange market?

Pablo Soria De Lachica: Traders employ multiple strategies to make money from the forex market. At its heart, financial gains on the foreign exchange mirror any other wealth-building initiative: buy low and sell high. When traders purchase a certain currency on the foreign exchange, they do so in anticipation that the value of that currency will rise compared to the currency that they traded for it.
Question: Can you explain exchange pairs?

Pablo Soria De Lachica: The term “exchange pairs” refers to the two types of currency you are trading. For instance, if you have American dollars (USD), and you purchase Euros (EUR), then your exchange pair is EUR/USD. Exchange pairs are always expressed as BUY/SELL.

Question: Can you explain the concept of over the counter (OTC) trading?

Pablo Soria De Lachica: The foreign exchange is an OTC market because traders make direct trades via the telephone or computer. The stock market, which is not an OTC market, makes all trades on the floor of exchanges like the New York Stock Exchange.

Question: How can one start forex trading?

Pablo Soria De Lachica: Individuals who wish to start forex trading need to find a broker, such as Bforex. One of the nice things about the Bforex brokerage is that we offer practice accounts that can help new traders learn the ins and outs of the market without financial risk. Use the information and analysis tools available, and learn what affects the value of currencies. Once you have educated yourself, determine your initial buy-in and begin trading.