Basic Currency Trading Tutorial - Outlining It For You
Trading on the Forex can be a daunting task. The following currency trading tutorial will introduce some of the areas you will need to understand in order to trade successfully in this market. To become a profitable trader, you must build your knowledge constantly.
You will need to open a trading account with a broker. The initial deposit that you make will be small in comparison to the amount of money you will be trading. Your broker will lend you a large percentage of the money you will be trading with. This leverage must be carefully managed. It can greatly enhance your gains, but it can cause your losses to be multiplied if the trade moves against you.
Currencies will always trade in pairs. One currency is matched up against another. The EUR/USD(the euro and dollar)trade as a pair. The GBP/USD(the pound and dollar) are paired. The USD/JPY(dollar and yen) trade as a pair and the USD/CHF(dollar and Swiss franc) are matched together.
The currency which will be purchased is the base currency. It is listed first. The base will be purchased with the second currency which is the quote currency. 1.53 GBP/USD means that a pound can be purchased for $1.53. Another example is .95 USD/JPY, means that it costs .95 yen for each dollar.
You will see two prices for a currency. One price is for the bid and one is for the asking price. The bid is what you receive if you are selling the contract. The asking price is what you would need to pay the broker to purchase the currency. The spread between the prices is the broker's commission.
Making money while trading currencies can be a difficult task. There are many factors to analyse when making buy and sell decisions. If you think prices on the Swiss franc are going to drop, you would buy the USD/CHF and hope to sell in the future after the franc has dropped against the dollar. Selecting the way the market will move depends on technical as well as fundamental issues. However, after you have a good idea of the future direction, the famous saying "buy low and sell high." Is the objective. Another exercise that will bring profits is to sell high and buy back the currency in the near term to cover the open position.
If there is one thing you take away from this currency trading tutorial it should be that you need to become an expert in two areas. The first one is to become an expert in technical analysis. Nearly all traders use this tool to help them make their trading decisions so it is very important that you use it also. There are excellent books on technical analysis, as well as high quality classes taught be experienced traders. Technical analysis will help you identify price trends and changes that are developing in those trends. This will help in making decisions to buy or sell and when. You will learn to set stop-loss-orders to limit your risk exposure. When you combine this technical analysis with fundamental analysis you are in a position to make the best decisions. Fundamental factors have a day to day affect on prices and technical analysis can help you see how these factors have moved prices in the past. Past behavior can help predict future behavior.
As mentioned earlier in this currency trading tutorial, we simply touched on the major factors that go into becoming a successful currency trader. Continuing you research and study is essential. There are many experienced traders in the market so make sure you are prepared before you start. - 23196
You will need to open a trading account with a broker. The initial deposit that you make will be small in comparison to the amount of money you will be trading. Your broker will lend you a large percentage of the money you will be trading with. This leverage must be carefully managed. It can greatly enhance your gains, but it can cause your losses to be multiplied if the trade moves against you.
Currencies will always trade in pairs. One currency is matched up against another. The EUR/USD(the euro and dollar)trade as a pair. The GBP/USD(the pound and dollar) are paired. The USD/JPY(dollar and yen) trade as a pair and the USD/CHF(dollar and Swiss franc) are matched together.
The currency which will be purchased is the base currency. It is listed first. The base will be purchased with the second currency which is the quote currency. 1.53 GBP/USD means that a pound can be purchased for $1.53. Another example is .95 USD/JPY, means that it costs .95 yen for each dollar.
You will see two prices for a currency. One price is for the bid and one is for the asking price. The bid is what you receive if you are selling the contract. The asking price is what you would need to pay the broker to purchase the currency. The spread between the prices is the broker's commission.
Making money while trading currencies can be a difficult task. There are many factors to analyse when making buy and sell decisions. If you think prices on the Swiss franc are going to drop, you would buy the USD/CHF and hope to sell in the future after the franc has dropped against the dollar. Selecting the way the market will move depends on technical as well as fundamental issues. However, after you have a good idea of the future direction, the famous saying "buy low and sell high." Is the objective. Another exercise that will bring profits is to sell high and buy back the currency in the near term to cover the open position.
If there is one thing you take away from this currency trading tutorial it should be that you need to become an expert in two areas. The first one is to become an expert in technical analysis. Nearly all traders use this tool to help them make their trading decisions so it is very important that you use it also. There are excellent books on technical analysis, as well as high quality classes taught be experienced traders. Technical analysis will help you identify price trends and changes that are developing in those trends. This will help in making decisions to buy or sell and when. You will learn to set stop-loss-orders to limit your risk exposure. When you combine this technical analysis with fundamental analysis you are in a position to make the best decisions. Fundamental factors have a day to day affect on prices and technical analysis can help you see how these factors have moved prices in the past. Past behavior can help predict future behavior.
As mentioned earlier in this currency trading tutorial, we simply touched on the major factors that go into becoming a successful currency trader. Continuing you research and study is essential. There are many experienced traders in the market so make sure you are prepared before you start. - 23196
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Be SURE to read up on a currency trading tutorial before you learn international currency trading!
posted by X - Men @ 4:25 AM
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