Have you ever visited another country? If yes, then you must have gone to a currency exchange booth and then exchanged money with the country�s currency you had visited. It is quite possible that you have found a screen displaying the message different �exchange rates� for other currencies.
While exchanging money, you have actually taken part into the Forex market. You exchanged one currency for the other or sold Dollars and purchased Yen in the terms of Forex trading.
What should you know about Forex?
Forex or foreign exchange is believed to be the biggest and the most liquid market in the entire world having the trading volume which is more than $5 trillion on a daily basis. You may visit TechnicalTradingsignals.com to get more idea about Forex trading.
How Forex trading works?
If you want to trade Forex, then you need to buy and sell currencies with the objective of earning some profit. Forex trading consists of two currencies at a time which are the quote currency and the base currency. The difference in the price is where you can earn either profit or loss.
Currency symbols consist of three letters in which the first two letters denote specific name of the country and the third letter identifies name of that country�s currency which is usually first letter of the currency�s name.
What are currency pairs?
Forex is about guessing the rates of currencies that keep on fluctuating between the two countries. Similarly, the two currencies are usually termed as currency pairs which are made of the quote currency and the base currency. One of the commonly traded currency pairs is Euro against Pound which can be presented in the form of EUR/GBP.
In case of currency trading, the currency listed first is known as the base currency while the currency listed in the second is known as the counter or quote currency. The currency pair helps in demonstrating the amount of quote currency required to purchase one unit of the base currency of pair. Each Forex trade consists of a concurrent purchase of one currency and the sale of another though the pair is considered as a singular unit which is an individual instrument either bought or sold.
What should be a base country?
This is believed to be first currency set that has been found into the Forex pair. It is amongst the ones bought or sold for quote currency.
What can be said as a quote currency?
This is amongst the second currency that appears into the pair and is called the �counter currency�.
What is a bid price?
This is the price in which a trader wants to buy a currency pair which keeps on fluctuating continuously.
What is said to be an ask price?
This is the price which a trader may enquire at the time of selling currency pair. The ask price keeps on changing constantly and has been driven particularly according to market demand though it id quite susceptible to political as well as economic factors.
What is actually a spread?
A spread is considered to be the number that you get at the time of deductinh the bid (buy) price from the ask (sell) price. The difference will be the cost of the trade and is an important factor for Forex traders. You may come across the phrase �tight spread� which means the costs of trading are low.
What are considered to be pips?
Pip or point in price and price interest point helps in calculating the price changes and movements into the currency pairs. Pips can be estimated to five decimal points and you may hear traders say that they have made 70 pips today.
What is believed to be a position?
A position is actually a trade that is in progress at present. In terms of trading, you may get longer as well as shorter positions:
- Long position � It happens when a trader buys currency with the hope of its increase. After the currency has been sold back, you will find that the long position will be considered closed.
- Short position � It occurs when the trader sells a currency by expecting it will decrease. When the currency is again bought, you will find that the short position will then be closed.
What currency pairs are believed to be very popular in forex trading?
Though you may trade any currency pair in terms of theory, there are some pairs that seem to be the most traded consistently. These are known as �major pairs� and represent the largest economies of the world. The major pairs make up around 80% of the total trading volume into the Forex market.
Examples of major pairs are: USD/JPY, EUR/USD, USD/CAD, GBP/USD, USD/CHF, NZD/USD, AUD/USD. In the Forex trading, there are different combinations of currency pairs which have created their own nicknames. Some of them are self-explanatory while others have their historical meaning.
How can you begin with Forex trading?
You can become a profitable trader within a short span of time. The mentors have the brains and possess several years of experience with technical know-how to match perfectly. They help you to understand the patterns, psychology, back-testing, risk management, fundamentals, technical and much more. They even share personal trading strategies and explain how to implement them properly into the Forex market. If you have any Forex market related question, then you can get the answers from the mentors quickly finscreener.
Thus, sign up for your free trial account today and take the first step for becoming a profitable trader. The traders at Forex Signals will turn you into a winner.