How Does One Become an International Currency Trading Success?

By: Jim Cavany

With growing numbers of corporations doing business around the world, the advent of international currency trading is exploded. The currency market is the most liquid market in the world. Currencies can be traded 24 hours a day, 5 days a week at some trading center in the world. Speculators make up 70% of the currency trading market.
Having a thorough understanding of the international currency trading market is essential to making money. There are extremely knowledgable traders that will be competing against you so getting the best education you can before you start is the best way to prepare. You should read recommended books and publications, as well as take a highly ranked trading course. Find one that is taught by a professional trader. It will be worth it in the long run.
Managing the high degree of risk in the international currency trading market is one other things that a trader must do. Not only are there many experienced professionals in the market, the leverage used with trading in this market can significantly increase the level of risk you must be willing to accept. Your broker will loan you the major portion of your trading capital. You must control this risk as you trade.
All currency contracts trade in pairs. The pairs are trading against one another. They are listed with the base currency first and the quote currency second. EUR/USD is the euro and the dollar. GBP/USD is the British pound and the dollar. USD/JPY is the dollar and the Japanese yen and USD/CHF is the dollar and the Swiss franc. The base currency is the one being bought/sold. It is bought using the quote currency. If the market price of the base currency is expected to rise against the quote currency, you should buy the base. Your intention will be to sell later at a higher price realizing a profit. The reverse is done if you think the base currency will decline.
Nearly 70% of the participants in the international currency trading markets are speculators. They are in almost every group in the market. The largest group of speculators is made up of the inter-banks. These are the large investment banking firms. They trade for their customers and for themselves. They make up about 50% of the daily volume. Hedge funds are a growing group in the market. They can use more expanded and aggressive investing strategies than mutual funds so they can buy and sell currencies in order to allow their customers to benefit from price moves in currencies. Governments use the currency market as a way to maintain balance in their monetary systems. A rapidly growing sector of the market is the individual trader. The volume of trading makes it easier for the individual trader to be in this market.
Trading in the currency markets is a complex process. Traders obviously need to understand what moves the market prices. There are many reasons for currency prices to move up and down. Factors that affect prices stretch from budget deficits and surpluses, employment levels, interest rates and money supply to political and climate environments. There are many other issues that can affect price levels as well. Having a high level of knowledge about how these things impact prices is the key to success.
Charts are used by all professional currency traders. Prices are plotted on a chart to show a picture of past trends and to help the trader see trends as they begin to form. Successful traders identify trends and try to ride with them for as long as they can.
Being prepared through education and practice is the best way to be a success in international currency trading. Ongoing study will do nothing but improve your trading skills.

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