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Finance & Stock Groups Forum Index » Futures » Forex Trading - Learn the Basics of Currency Trading
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| Sally Harmon |
 Posted: Thu Jul 30, 2009 6:59 am |
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Guest
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The idea of forex trading may be fascinating to you but also seem
complex. Yet if you have a firm grasp on the basics of it you will
find it is easier than you initially though. As automated forex robots
and managed forex are getting even more popular, more and more people
will be taking advantage of forex.
So let's go through the basics here. Do you know what currency pairs
are? If not then that is a good place to start learning the basics of
forex trading. That is because all forex currency trading takes place
with currency pairs. There are for main combinations you will be
working with - EURUSD, GBPUSD, USDCHF, and USDJPY.
Currency pairs
Any currency price that you see on a chart will be in such currency
pairs. The first currency is called the base currency and the second
one is called the counter currency. When you see EURUSD 1.2728 it
means that 1 euro will buy that much in US dollars. Almost all of the
most frequently traded currency pairs include US dollars. The majors
are the typically the ones that have the greatest liquidity and
trading occuring.
Majors, cross rates, and exotics
The non majors fall into a category known as cross rates. They often
include one of the other very popular forms of currency though
including the euro. Those that involve two types of currency that are
very unusual to forex trading are known as exotics. You do need to be
careful with them as they aren't liquid investments. They also involve
a bigger spread than you may be willing to work with.
Face value
The face value of a currency pair refers to how much of the base
currency you intend to trade. This is a very important concept when it
comes to the world of forex. The platform you use for trading will ask
what your face value is and so it is essential that you have the right
information to enter. Otherwise errors will occur and it could end up
costing you more money than you had planned to invest.
Pips
Pips is a term often associated with Forex trading. This is another
term for points. As the chart for the currency pairs changes there
will be movement. A pip means that there has been movement in the last
decimal point of the currency pair you are looking at. In terms of
profit, pips is used to refer to that rather than the base currency.
For example, if the EURUSD is currently 1.2728 and it moves to 1.2738,
there has been a 10 pip move.
Time frames
This refers to the types of forex charts that you are using,
specifically the time frame. For example, you can look at hourly
charts where every bar or line represents 1 hours worth of activity,
the high and low. However, some traders trade the 5 minutely charts,
which means that a new bar is formed every 5 minutes. This requires
quicker application of your forex system rules.
These are just a few of the terms that you will hear again and again
in regards to Forex trading. The more you understand each of them and
how they affect your investments the more successful you will be. Too
many individuals invest without having any understanding of these
elements. And your options include traditional forex trading and
automated forex trading with robots.
As you read about forex or currency trading, make note of any terms
you don't understand. That way you can look up the information later
on. Don't assume you know what is meant by the terms or you could end
up making mistakes that cost you money down the road. A good sound
knowledge is the first step in forex trading of any kind.
Doubles Real Monetary Deposits In Under 30 Days: http://ivyfxbot.url-site.com/ |
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