|
|
|
Don't be a victim of Cybercrime
When you access the Internet through the world wide web it is extremely important that you safe guard your personal information.
There are literally thousands of people around the world that make a living exploiting the security loop holes...
FOREX 101: Make Money with Currency Trading
For those unfamiliar with the term, FOREX (FOReign EXchange market), refers to an international exchange market where currencies are bought and sold. The Foreign Exchange Market that we see today began in the 1970's, when free exchange rates and...
Forex Trading Online - 7 Reasons You Should!
Copyright 2005 Keith Thompson Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways...
FOREX Trading Strategies
FOREX Trading Strategies
To be a successful FOREX trader you need to develop and adhere
to a trading strategy. There are many different strategy's
available and no particular one is good for all traders; rather,
each trader needs to develop...
Where to Get Forex Training
For those of you who are interested in forex trading, you may want to start off by getting some good forex training. Forex training is a necessity for anyone with this interest. This is because a lot of money is involved in forex trading. If you...
|
|
| |
|
|
|
|
|
|
Currency Trading: Understanding the Basics of Currency Trading
Investors and traders around the world are looking to the Forex
market as a new speculation opportunity. But, how are
transactions conducted in the Forex market? Or, what are the
basics of Forex Trading? Before adventuring in the Forex market
we need to make sure we understand the basics, otherwise we will
find ourselves lost where we less expected. This is what this
article is aimed to, to understand the basics of currency
trading.
What is traded in the Forex market?
The instrument traded by Forex traders and investors are
currency pairs. A currency pair is the exchange rate of one
currency over another. The most traded currency pairs are:
EUR/USD: Euro GBP/USD: Pound USD/CAD: Canadian dollar USD/JPY:
Yen USD/CHF: Swiss franc AUD/USD: Aussie
These currency pairs generate up to 85% of the overall volume
generated in the Forex market.
So, for instance, if a trader goes long or buys the Euro, she or
he is simultaneously buying the EUR and selling the USD. If the
same trader goes short or sells the Aussie, she or he is
simultaneously selling the AUD and buying the USD.
The first currency of each currency pair is referred as the base
currency, while second currency is referred as the counter or
quote currency. Each currency pair is expressed in units of the
counter currency needed to get one unit of the base currency. If
the price or quote of the EUR/USD is 1.2545, it means that
1.2545 US dollars are needed to get one EUR.
Bid/Ask Spread
All currency pairs are commonly quoted with a bid and ask price.
The bid (always lower than the ask) is the price your broker is
willing to buy at, thus the trader should sell at this price.
The ask is the price your broker is willing to sell at, thus the
trader should buy at this price.
EUR/USD 1.2545/48 or 1.2545/8 The bid price is 1.2545 The ask
price is 1.2548
A Pip
A pip is the minimum incremental move a currency pair can make.
A pip stands for price interest point. A move in the EUR/USD
from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY
from 112.05 to 113.10 equals 105 pips.
Margin Trading (leverage)
In contrast with other financial markets where you require the
full deposit of the amount traded, in the Forex market you
require only a margin deposit. The rest will be granted by your
broker.
The leverage provided by some brokers goes up to 400:1. This
means that you require only 1/400 or .25% in balance to open a
position (plus the
floating gains/losses.) Most brokers offer
100:1, where every trader requires 1% in balance to open a
position.
The standard lot size in the Forex market is $100,000 USD.
For instance, a trader wants to get long one lot in EUR/USD and
he or she is using 100:1 leverage. To open such position, he or
she requires 1% in balance or $1,000 USD.
Of course it is not advisable to open a position with such
limited funds in our trading balance. If the trade goes against
our trader, the position is to be closed by the broker. This
takes us to our next important term.
Margin Call
A margin call occurs when the balance of the trading account
falls below the maintenance margin (capital required to open one
position, 1% when the leverage used is 100:1, 2% when leverage
used is 50:1, and so on.) At this moment, the broker sells off
(or buys back in the case of short positions) all your trades,
leaving the trader "theoretically" with the maintenance margin.
Most of the time margin calls occur when money management is not
properly applied.
How are the mechanics of a Forex trade?
The trader, after an extensive analysis, decides there is a
higher probability of the British pound to go up. He or she
decides to go long risking 30 pips and having a target (reward)
of 60 pips. If the market goes against our trader he/she will
lose 30 pips, on the other hand, if the market goes in the
intended way, he or she will gain 60 pips. The actual quote for
the pound is 1.8524/27, 4 pips spread. Our trader gets long at
1.8530 (ask). By the time the market gets to either our target
(called take profit order) or our risk point (called stop loss
level) we will have to sell it at the bid price (the price our
broker is willing to buy our position back.) In order to make 40
pips, our take profit level should be placed at 1.8590 (bid
price.) If our target gets hit, the market ran 64 pips (60 pips
plus the 4 pip spread.) If our stop loss level is hit, the
market ran 30 pips against us.
It's very important to understand every aspect of trading. Start
first from the very basic concepts, then move on to more complex
issues such as Forex trading systems, trading psychology, trade
and risk management, and so on. And make sure you master every
single aspect before adventuring in a live trading account.
About the author:
Raul Lopez is a full time Forex trader and founder of
http://www.straightforex.com a high quality Forex training company.
|
|
|
|
|
| Currency Trading, Forex Trading, Forex, Online Currency Trading |
| Offers 24 hour online currency trading for institutions and professional traders. |
| www.fxcm.com |
|
| OANDA FXGame - Currency Trading Demo Platform |
| You can start playing the currency trading market with real market conditions ... The platform was created with the goal of making currency trading ... |
| fxgame.oanda.com |
|
| Forex | Forex Trading | Forex Minis | Online Currency Trading |
| FOREX.com - THE site for forex trading. 24hr commission-free currency trading w/ real time execution and guaranteed fills. Forex mini accounts from $250, ... |
| www.forex.com |
|
| Currency Trading News, Forex Trading News, FX News, Forex News |
| Currency Trading News, Forex Trading News, FX News, Forex News - Daily FX. |
| www.dailyfx.com |
|
| Currencies - Currency Converter & Latest Rates at CNNMoney.com |
| Dec 6 1:18pm ET †, US $, UK £, Japan ¥, Euro €. US $, 0.5079, 115.05, 0.7517. UK £, 1.969, 226.50, 1.4798. Japan ¥, 0.008692, 0.004415, 0.006533 ... |
| money.cnn.com |
|
| FOREX Advisory |
| The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with ... |
| www.cftc.gov |
|
| Forex Trading: Online Currency Trading from Global Forex Trading |
| Global Forex Trading is the premier online foreign currency trading firm and a primary market maker. To learn more about forex trading, visit GFTForex.com. |
| www.gftforex.com |
|
| Amazon.com: Foreign Currency Trading: From the Fundamentals to the ... |
| Amazon.com: Foreign Currency Trading: From the Fundamentals to the Fine Points: Books: Russell Wasendorf by Russell Wasendorf. |
| www.amazon.com |
|
| Forex, Online Currency Trading, FX, Foreign Exchange | ACM Forex |
| Forex Trading with The Forex Broker. ACM offers online currency trading, commission-free, tax-free, lowest forex spreads on the market, guaranteed fills, ... |
| www.ac-markets.com |
|
| OANDA FXTrade - Currency Trading, Forex Trading, Online Currency ... |
| Currency Trading with FXTrade, leader in online currency trading, provides real-time execution, free forex charts and quotes, and 24 hour forex trading. |
| https: |
|
| Forex-Day-Trading.com - Currency Trading with FREE Training |
| Learn how to day trade currencies with our free training. Try a free forex trading demo for 30 days. |
| www.forex-day-trading.com |
|
| Forex Online Currency Trading: Welcome to Global Forex |
| Global Forex offers online currency forex trading at inter-bank FOREX rates. Try our FREE online forex demo trading system. |
| www.globalforex.com |
|
| Forex trading - Realtime Forex online currency trading |
| Realtime Forex offers commission-free online currency trading on live foreign exchange prices. Realtime Forex’s currency trading service also includes free ... |
| www.realtimeforex.com |
|
| Forex Blog |
| Forex news blog with daily commentary. Has a good beginner's article. |
| www.forexblog.org |
|
| Common Questions About Currency Trading |
| Whether you're puzzled by pips or curious about carry trades, your queries are answered here. |
| www.investopedia.com |
|
| OANDA FXTrade - Currency Trading Basics |
| Currency Trading Basics. Exchange Rates and Spreads: ... In currency trading, these codes are often used to express which specific currencies make up a ... |
| fxtrade.oanda.com |
|
| Currency trading, free forex charts, news and analysis |
| Online currency trading with technical analysis, charts and forex news. |
| www.gfforex.com |
|
| Finance - Currency-Trading Ezine Articles |
| EzineArticles.com allows ezine or email list publishers to upload or download free expert content that can be used within email newsletters or websites. |
| ezinearticles.com |
|
| MGFOREX |
| MG Financial Group - Forex, FX, Online Forex Trading. |
| www.mgforex.com |
|
| DirectoryM - Debt Settlement Solutions |
| Simply provide your contact details and describe your needs to receive a free consultation from business or personal debt service providers. |
| www.directorym.com |
|
|