The Absolute Basics of Forex Trading

4 Mar

0
0
0
0
0
0
0
0
0
or copy the link

When it comes to trading, it’s unlikely that any vehicle is more lucrative than currencies. For instance, on a normal day, the global foreign exchange market sees trading worth a minimum of one trillion dollars. With so much money changing hands, if you can get in on the action for only a small percentage, your life would be made.

This is the thinking that most people enter forex trading with. However, while forex trading is incredibly versatile and rewarding for a talented individual, it can also be very unforgiving for the unprepared. To be successful at forex trading, you’ll need to know a lot. However, we can help you start with the following basics.

Forex Trading Fundamentals

Forex trading is the exchange of currencies with a view on benefiting from exchange rate fluctuations. Currencies which see the most volume of movement in forex trading include American dollars, European euro, British pounds, Japanese yen, Canadian dollar, Australian dollar, and Swiss franc.

In the forex market, currencies are always traded in pairs. This means that you can’t just sell off one currency. In order to sell one currency, you’ll need to buy an equivalent amount of another currency. So, with every trade, you’ll always buy and sell at the same time.

Four Key Terms of Forex Trading

To be a successful forex trader, you’ll have to learn a lot. However, if you just want to practice with demo accounts, you can begin by understanding the following four terms.

  1. Ask price: The Ask price is the price at which you would be able to buy a currency.
  2. Bid price: The Bid price is the price at which you would be able to sell a currency
  3. Spread: Spread is the difference between the Ask and Bid prices. Depending upon this spread and the timing of your trades, you can end up profiting or losing a lot of money in the market.
  4. Pip: A Pip is the lowest unit of purchase or sale of a currency unit in the forex market. It means Percentage in Points.

How the Trades Are Made

In order to start practicing or making trades in the forex market, you’ll need an account with a forex broker like ETX Capital. This account could be demo or live. You’ll have to download the software program from this forex broker and use it to make trades in the market.

In the program, you’ll see live prices of currency pairs in the market and even have access to analytical data and forex news to make your strategy. Every time you make a trade, the broker takes a cut as its commission. You can take your winnings out at regular intervals with the exact time determined by you.

No comments yet

Leave a Reply