Posts Tagged ‘How to Trade Forex’

Forex basics

Today we are going to briefly skim over the basics when it comes to trading forex. Trading forex can be quite exciting and at the same time can earn you a very nice profit, however the downside to this is that there is no fool proof way to make money each and everyday therefor you must always remember there are risks involved.

Our website is aimed at newcomers to the forex trading market so if you are experienced with trading currencies you probably will not need to read on but if you new to all this the make sure you take this in. Firstly you should do your research and make sure you understand exactly what you are getting yourself into, if you are ever second guessing yourself than please don’t try to do it all on your own, our website has many useful articles to help you on your way and don’t forget professional forex brokers are only a phone call away.

Forex trading overview:

Forex trading is also commonly referred to as forex, fx and foreign exchange these names are used to describe trading currencies, the forex market is by far the biggest & best market in the world with a daily turnover of just under 4 trillion dollars (yes we really said 4 trillion). The forex market is quite unique as it does not rely on companies and or businesses, a very large percentage of trading currencies comes down to speculation and is not something that you can predict as you can with stock markets, forex is available for trade 24 hours a day and the core forex trade centers are based in New York, Sydney, London, Tokyo and Frankfurt.

Trading forex basics:

A FX trade is simultaneous this means your are selling a currency and purchasing another, as you should already know currencies fluctuate and this is how we aim to make a profit, this method is generally called a Cross Trade, lets say for example: Euro/Japanese yen or GBP/USD this would represent a cross trade.

Common forex terms:

• Pips refers to the smallest unit a cross price quote change, get used to the words “PIP or PIP SPREAD” as you will hear & see this a lot, a common term that gets thrown around like a rag doll is a 3-pip spread what this means is that once your trade is complete and you have revealed when you compare asking price against the bidding price, to get a better understanding of this here is a basic example 3 spread pip: USD/YEN is quoted at a bid price of 0.9875 and an ask price of 0.9878. The difference is YEN 0.0003, which is equal to 3 pips.
• Spread basically means the difference between the ASK and the BID, under standard market conditions the spread on majors is generally only 3 pips (note this can change when a certain currency is vulnerable and puts pressure on other currencies). We will cover “trading conditions” in another article at a later date.

Commonly used forex terms & descriptions:

You can view our commonly used Forex terms here: Click Here