There is a very big difference between trading and investing. Currency trading is not investing. It is considered speculation (like day trading stocks). Every portfolio requires a certain portion of speculation and investments. With the low minimum required ($2,500 for a standard account / $250 for a mini account) required to start trading currencies, online currency trading can be the perfect tool to deal with the speculative portion of any portfolio.

The approach that should be taken when investing and trading should be different. Investing requires the thorough fundamental analysis of a security to determine if it is attractive or not. For example, to increase the probability of making a good stock investment, an individual should try to buy that stock at a good price. In order to do that, the investor needs to determine if the current price of the stock in the market is attractive relative to the stocks intrinsic (real) value by studying the company’s financial statements, earnings trends, current and future business environment, quality of management, and many, many other factors. In making the investment, the investor is not concerned with what is going to happen to the price of the stock the next day, because investments are long-term in nature.

Speculation (like currency trading) is short-term in nature. An day trader buying euros versus the dollar is not trying to predict what is going to happen to the euro in the next 10 years. He is concerned with the price fluctuations after he enters a position. His goal is for the euro to appreciate in value as soon as possible after his purchase. In order increase his chances of trading successfully, a currency trader will study the past price history of the currency pair he is trading and compare it to the current prices to determine what the price is PROBABLY going to do next. This study of prices is called “technical analysis.” To learn more about technical analysis, read “Technical vs fundamental analysis in the currency market.” [In our free currency trading training, we teach our customers how to use technical analysis to trader currencies]. For speculation, trading currencies is a lot more advantageous than trading stocks because a lot less money is required to trader currencies and currency trading offers lower margin requirements and flexible trading hours (increasing leverage increases risk) [to see more advantages of currency trading, click here].

Although some claim that no speculation is profitable, this is far from the truth. The reason why many disagree with speculation is because of a misunderstanding of what speculation can be. Pure speculation is equivalent to going to Las Vegas and betting everything on the roulette table. This type of speculation will always lead to financial ruin. Most people think that all speculation is like this. Currency trading, on the other hand should not be approached as careless speculation. Traders should treats it as a business and dedicate the time to learn about it and get a lot of practice on a demo (simulator) before they even consider risking any of their real capital. Before a currency trader starts trading, he also needs to understand how the currency market works and how to operate his trading software. This is taught in our currency trading training.

There is a very big difference between trading and investing. Currency trading is not investing. It is considered speculation (like day trading stocks). Every portfolio requires a certain portion of speculation and investments. With the low minimum required ($2,500 for a standard account / $250 for a mini account) required to start trading currencies, online currency trading can be the perfect tool to deal with the speculative portion of any portfolio.

The approach that should be taken when investing and trading should be different. Investing requires the thorough fundamental analysis of a security to determine if it is attractive or not. For example, to increase the probability of making a good stock investment, an individual should try to buy that stock at a good price. In order to do that, the investor needs to determine if the current price of the stock in the market is attractive relative to the stocks intrinsic (real) value by studying the company’s financial statements, earnings trends, current and future business environment, quality of management, and many, many other factors. In making the investment, the investor is not concerned with what is going to happen to the price of the stock the next day, because investments are long-term in nature.

Speculation (like currency trading) is short-term in nature. An day trader buying euros versus the dollar is not trying to predict what is going to happen to the euro in the next 10 years. He is concerned with the price fluctuations after he enters a position. His goal is for the euro to appreciate in value as soon as possible after his purchase. In order increase his chances of trading successfully, a currency trader will study the past price history of the currency pair he is trading and compare it to the current prices to determine what the price is PROBABLY going to do next. This study of prices is called “technical analysis.” To learn more about technical analysis, read “Technical vs fundamental analysis in the currency market.” [In our free currency trading training, we teach our customers how to use technical analysis to trader currencies]. For speculation, trading currencies is a lot more advantageous than trading stocks because a lot less money is required to trader currencies and currency trading offers lower margin requirements and flexible trading hours (increasing leverage increases risk) [to see more advantages of currency trading, click here].

Although some claim that no speculation is profitable, this is far from the truth. The reason why many disagree with speculation is because of a misunderstanding of what speculation can be. Pure speculation is equivalent to going to Las Vegas and betting everything on the roulette table. This type of speculation will always lead to financial ruin. Most people think that all speculation is like this. Currency trading, on the other hand should not be approached as careless speculation. Traders should treats it as a business and dedicate the time to learn about it and get a lot of practice on a demo (simulator) before they even consider risking any of their real capital. Before a currency trader starts trading, he also needs to understand how the currency market works and how to operate his trading software. This is taught in our currency trading training.

How did foreign currency exchange come about? The foreign exchange market that the retail currency trader knows today, has been shaped by a long history of global historical events. Consequently, studying the history of foreign currency exchange can be a lengthy and time consuming process. Although important for cultural and historical reasons, a detailed study of specific historical events like the Bretton Woods accord and the Smithsonian Agreement is not very useful for the modern foreign currency exchange trader. It is more important for a trader that is considering foreign currencies, to understand the logic behind foreign exchange as an efficient medium of exchange for goods and service.

The barter system was originally used by our ancestors as a means of exchange. Bartering was inefficient as an exchange mechanism because it required that a lot of time be spent in negotiation to strike a deal. Also, much time was needed to search for the goods required for bartering. The barter exchange system was eventually enhanced by the public acceptance of standardized sizes and grades of metals like gold, silver and bronze for the exchange of merchandise. This metal currency for exchange had many advantages including durability and storage. During the middle ages, a variety of paper IOU’s started gaining popularity as a medium of exchange.

Throughout the years, people began to realize that carrying around paper currency was a lot more advantageous than carrying heavy bags of precious metals. Consequently, stable governments eventually adopted paper currency and backed its value with gold reserves. This led to the birth of the gold standard. On July of 1944, the Bretton Woods Accord pegged the US Dollar to gold at a price of $35 per ounce. The Bretton Woods Accord also fixed other foreign currencies to the dollar. It lasted until 1971, when US president Nixon let the dollar “float” freely against other foreign currencies and suspended the conversion to gold.

As we fast forward to the present, the foreign currency exchange market has grown into the largest financial market in the world, with an aggregate daily volume of 1.5 trillion dollars or greater. Even though foreign exchange has traditionally been an institutional (Inter-Bank) market, the growth of the Internet has propelled online currency trading among private individuals to the stratosphere, widening the retail currency trading market considerably.