Basics of Forex Trading – Part 1

The daily trading volume of the forex market is more than 5 trillion US Dollars, making it the largest liquid market in the world. Liquidity refers to the ease with which buyers open and close positions without having to worry about the price of the underlying asset.

The concept of liquidity also deals with volatility, measuring the speed and rapidity of the change in the buy and sell price. Most forex traders prefer volatile markets because they offer opportunities to make money, especially with short -term strategies such as scalping and day trading.

Forex trading problems

Most forex traders lose money over time. Lack of preparation, poor leveraging, poor skills, and the fatigue of the heart to take their all, create losses that require the trader to ‘wash out. outside ’, leaving the forex game to the participant. And small people know how to overcome these headwinds, often spending hours building skills, doing research, and testing new systems and technologies.

In addition, banks around the world seek to manipulate monetary and lending through demand and solicitation of prices through the interbank quoting system, which often stimulates supply and demand issues. Or market events or releases. This is a big problem for the regular newcomer who is growing happily in the midst of planned market movements, not to leave it at that, or to take a brief overview of their level of knowledge.

Ironically, the new buyer’s biggest problem comes from the lender they choose. The large interbank system is a hodgepodge of ‘regulated brokers’, offering access to the free market, as well as ‘unregulated brokers’ who take advantage of the lack of flexibility of clients. These businesses are easy to find because most residents (headquarters) pay taxes offshore, than in the US, UK, EU, or Australia, which to regulate the financial market.

Unregulated buyers do the most damage when they create a ‘plan’ to take another side of the buyer’s position and change the price through ‘requoting’. begin to relax and intensify unexpected losses, especially during the hours when most traders are asleep. . It can also be difficult to get your money back if you choose to close an account at an unregulated broker.

Forex Trading Terms

Currency: Funds have two currencies, the base currency on the left (top) and the listed currency on the right (bottom). The EUR/USD is an example of a currency pair. When buying this pair, the trader buys the Euro and sells the American currency. On the other hand, in selling this pair, the buyer sells the Euro and sells the American currency.

Major Brands: Financial groups can be divided into large, cross, small, and exotic pairs. Major currencies are the US Dollar or counter-currency, combined with any of the seven major currencies: EUR, CAD, GBP, CHF, JPY, AUD, and NZD. New investors are more vulnerable to large companies because they have more water and carry lower stock prices through more stable platforms, limiting slip.

Key Meeting: Cross -countries have two major currencies, except the US Dollar. Unlike large companies, higher stock prices, higher volatility, and lower volatility, increase volatility. Examples of cross -currency pairs are EUR/GBP, EUR/CHF, and AUD/NZD.

Price: The exchange rate represents the value of the principal, expressed in the form of the exchange rate (quoted currency). For example, if the EUR/USD exchange rate is 1.2500, € 1.00 will be traded at $ 1.25. An increase in the percentage indicates that the base currency is appreciating against the counter currency and a fall in price indicates that the base currency is declining against the counter currency.

Status/Question: Financial institutions have two costs: the price and the demand price. The purchase price represents the current price at which buyers can buy (short), and the demand price represents the current price at which buyers can buy. It is lower than the asking price and the difference between the two is called flat.

laha: The difference between the price and the demand price. The spread represents one type of market value for a trader and a source of value for the investor. This cost can significantly reduce profits or increase losses when engaging in high -volume trading strategies, such as scalping.

Pip: Pip refers to the ‘percentage on the number’, or the smallest increase that allows a pair to rise or fall in price. One pip equals a quarter of most financial companies. For example, if the EUR / USD demand price is said to be at 1.2542 and combine to 1.2548, the conversion would be equal to six pips.

Fixed: The bar symbolizes a forex trader that is expected to close and prevent another position from a positive or negative outcome. Investors, investors, and businesses use hedge technology to increase revenue, cover losses, or hedge investments.

limit: Brokers offer money up to a certain amount of money, called margin, so traders can take leverage positions. Loans are available at commercial rates through overnight loans. For example, a 30: 1 margin can represent 30 times higher than the cash flow. Leverage positions need to build assets before borrowing costs or money will be lost.

Leverage: Leverage allows traders to take positions rather than cash through a margin broker loan. Taking a lot of leverage is a challenge for new forex traders but it is a practical and required strategy for experienced forex traders.

Types of major commands

The forex trader initiates a position through a buy or sell order, indicating whether to take the position ‘on the market’, or at the price point. A market order will be executed immediately at the current asking price for the sale or the current purchase price for the sale. Both orders can melt when prices move quickly, starting trades at high or low price levels.

A limit order can be used in place of a market order, specifying the price a) that the limit will be in a market order or b) the exact price of the entry. The order will be filled when the price is printed with the first technology, which can be melted down, but the price can ‘run’ the order with the second technology and never fill. The same types of limit commands are used, including stop and expiration commands to open, drive, and close positions.

In summary:

  • Sales Sales: open a long position at a price higher than the current price or close a short position at a price lower than the current price.
  • Sales Sales: open a short position at a price lower than the current price or replace a long position at a price higher than the current price.
  • Sales Limits: open a long position at a price lower than the current price or close a short position at a price higher than the current price.
  • Sales limit: open a short position at a price higher than the current price or close a long position at a price lower than the current price.

Summarize ideas

The forex market has grown exponentially with new traders and it has not been easy to enter. It is not very difficult to learn the basics of forex trading but it is important to choose the right way to trade on your own, with a real knowledge of personal characteristics, time available, long -term goals, and goals. with current income. It’s a positive effort that benefits from dedication, perseverance, control of the heart, and a willingness to build many skills and strategies over time.

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