How does currency trading actually work? What does a trader do?

In your own words too... I am kinda dense right now.... lol

Public Comments

1. Very simple, a currency trader LOSES HIS/HER SHIRT. Don't do it!!!!! Actually, they mostly trade futures or options, very highly leveraged and RISKY. But, if you MUST, go to www.forex.com
2. First you open an account with a regulated brokerage. In the United States, that means a member of the National Futures Association (NFA). Otherwise, you could fall victim to some unscrupulous brokerage that will steal your money. Second, you open a "demo" account with the brokerage. This lets you play with "fake" money in the "real" market. Third, you learn what the 50% trading rule is. This is a simple, very reliable rule for when to enter a trade. Google it. Fourth, you decide for each trade how much money you are willing to use. You want to keep it small, because every trader, even professional floor traders, enter a lot of trades that go bad. Limit your losses. Fifth, practice trading with the demo account for a couple months. See how much money you make or lose. Sixth, if you feel confident, deposit some money with the brokerage. The minimum is usually $250 dollars. Finally start trading for real.
3. Some traders do it for speculation. Just for the sake of trading the currency and making a profit. Some companies do it, usually through money center banks, to hedge their currency risk. For instance they may do business in another country and have revenues in that country's currency. The exchange rate for that currency may go down and they would lose part of their profits when they tried to exchanger for US dollars.
4. you may want to check out this site. they offer free e-books and live one on one help to interested traders.
5. Currency trading is were either a company/broker private individual or club will say buy one currency like the United States Dollar and sell the British pound. What determines if you buy or sell is determined o what an economy is currently doing. If say today the markets in the US started gaining value and say the fed lowered the prime rate by a half percent, Then the dollar would gain on most currencies so you would want to sell the dollar while it is at its low and sell when it hits a high. As far as what determines that, is you need to watch charts and make an educated guess that the direction the currency is going it will continue to do so for a short period, long enough to cover your pip spread and then get out with a profit. Personally because of the above and more I use an investment club, as there are no fees charged by the club, and they have three different investments the complete thereby reducing possible loss. If interested look at there web site http://www.freewebs.com/mnthighinvest good luck in all your investments Bob