Forex trading is a shorter name for foreign exchange trading, which is the trading of international currencies. Usually, Forex transactions involve one investor (which may be a bank, institution, or individual investor) purchasing a certain amount of a currency in exchange for a certain amount of another currency.
The Forex market is presently one of the most liquid markets in worldwide trading. Liquidity refers to how easy it is to buy or sell an asset without causing the price of that asset to swing significantly. Cash is the most liquid asset, while mortgage backed assets are currently the most illiquid. Forex prediction simply means a prediction about whether a particular currency will gain or lose value.
The Forex market is the biggest market in the world, trading over US$3 trillion every day. Foreign exchange trading is a speculative trade. This means that only a small percentage of Forex market activities have to do with governments’ currency conversion needs. There is no central exchange for Forex trading analogous to, for example, the New York Stock Exchange. There are also no set business hours for trading in foreign currencies. The trades take place directly between the two parties either over the Internet or by phone. Major foreign exchange centers are Tokyo, London, Frankfurt, New York, and Sydney, so it is easy to see why trading takes place around the clock.
Because Forex prediction is a risky proposition, particularly for beginning Forex traders, it is almost impossible to be successful at trading foreign currencies without training. Learning Forex prediction involves learning the basic principles of currency price determinants, and all the factors affecting them. Skill using Forex trading tools is also necessary to put any skill at Forex prediction to work.
Newcomers to foreign currency trading are advised to spend some time demo trading. This means you set up a demonstration account with ‘virtual’ money. This allows you to learn about Forex prediction and theory while obtaining some experience in Forex trading without the risk of losing your money. It is estimated that up to 90% of new traders lose their money, mostly due to not having the basic skills and theory learned adequately before trading.
Forex prediction relies heavily on different charts, which display currency price fluctuations over a certain period of time. It also depends on so-called technical indicators, which are calculated based on averages and various characteristics of recent price changes. Main types of technical indicators are moving averages and oscillators. Details here: http://www.obitko.com/tutorials/neural-network-prediction/forex-prediction.html
A moving average is an average price of a currency over an interval of time, during an observational period that is divided by these time intervals. Plotted over time, moving averages are smooth curves, because statistical artifacts are calculated out.
An oscillator provides signals having to do with oversold or overbought market conditions. Oscillators are most useful to analyze when they are at extremes. Though many oscillators are complicated to understand, momentum is one oscillator that measures the rate of change in price. It is the difference between the current closing price and the oldest price from a given time period.
Forex prediction is a skill that it takes time to learn, but it is essential for those who want to try their hand at trading foreign currencies.