trading profit and loss account
How To Master Forex Investing.
Forex trading can be a nerve wracking form of investment. However it can be a very lucrative way of making money as well. The first obvious step is to Learn Forex Trading. You can learn about the forex online. It does take sometime to understand what influences the market. I find it more difficult to learn the mechanics and terminology of trading in the forex. You can find several websites that offer free practise accounts that will help you learn.
There are pips and margins and many other terms to learn for the mechanics of trading. One can be long in the market or they can be short in the market. There are charts to learn, there is technical analysis and fundamental analysis.
You also need to learn the economics of the forex markets. Factors that influence the market can work differently than what makes sense to the novice. When the stock market rises in the USA the dollar will usually fall. It can be hard for most of us to understand but with time you will.
Lately there has been good news in the US economy and the dollar has been falling. When investors are confident about risk in the stock market people will sell bonds and take cash out of savings to buy stocks. Instead of buying government bonds or saving their cash they are buying stocks.
Also governments sometimes engage with the markets to lower or raise the value of their currency. Sometimes they do this in an abrupt way forcing a major change. This can be nearly impossible to predict. For example twice last year, Japan dumped large amounts of yen into the market to lower its value. In each of those cases the yen did fall overnight.
I live in the Philippines but am a citizen of the USA. My income is all earned in dollars. My income has changed by as $200 per month solely due changes in the forex markets. This is significant at my income level. Changes like this do not usually happen overnight but over a year or more. We have seen the dollar fall quite a bit from two years ago. For folks living outside of their country of birth changes in the currency markets affect their standard of living. I can travel more when the dollar is rising. Quantitative easing has really hurt the value of the dollar. Bernanke has indicated that more of this may be coming.
You also have to consider the economics in both countries behind a currency. While the dollar could be rising over all, conditions for another currency could be right to see it rise even more.
Trying to keep up with all these factors and learning the mechanics of trading can be overwhelming for a new investor. Therefore, a practise account is usually a good option before starting to invest real money. Too many of them are limited to only 30 days and that is just not enough time for some. I for one require more time to learn something new.
The forex market is huge and its size dwarfs the stock market. The forex market is also more dynamic than the stock market. Change in the forex occurs at a much more rapid pace. This makes forex trading exciting but more risky. Currency trading is not the right form of investing for others.
A Level Accounting Trading Profit and Loss Account Balance Sheet Layout Episode #7 Prof. Accounting
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