FREE Guest Posting | Review Blog | Home » Business » Forex Trading for Beginners 

Forex Trading for Beginners 

by sam3352

Forex Trade for the Beginner What exactly is Forex Trading?

Forex is a abbreviated version of Foreign exchange. it is the process of trading one currency to another.

For instance:

If you travel to Malaysia for a vacation You’ll be able to sell Singapore Dollars to exchange in exchange for Malaysian Ringgit.

And, unlike the stock market which is traded through a central exchange however, it’s the Forex marketplace is open to trading through a counter. It’s also connected electronically between brokers and banks.

Here’s a summary:

You’re probably asking:

“Who are the major players on the Forex market?”

It’s the banks since they are market makers.

Companies that invest in Forex to protect their positions.

Then, there are those (like us and you) who shop, speculate, online or make trips to other countries.

Next…

What’s the benefits from Forex Trading?

Let’s take a look at some of the major advantages Forex Trading offers that you cannot find anywhere else…

high liquidity Based on the Bank of International Settlements (BIS), Forex is the largest market worldwide with more than $5,000,000,000,000 of transactions each day. This is Trillion with an “T” It means that you can trade and exit your trades with no hassle and with little slippage.

A low barrier to entry The majority of forex brokers for beginners allow customers to open accounts starting with just $100.

Greater risk-management You can trade micro lots, which allow users to effectively manage risk. And , unlike stocks for instance, the Forex market is not prone to gaps, meaning you’ll not lose more than you originally planned to.

Trade whenever you like You can trade at any time. Forex market is available 24/5. This means that you can make your trades from Monday at 5 pm EST until the Friday at 4 pm EST (depending on daylight time and daylight savings).

Low cost for transactions In contrast to Stocks, the majority of brokers do not charge you a transaction fee. Only pay for the spread.

So, what exactly is an exchange rate?

In Forex it is always having to deal with different currency pairs and not just one currency.

For instance:

EUR/USD: You swap Euro in exchange for US Dollar. US Dollar.

EUR/JPY: You can exchange Euro to the Japanese Yen.

USD/AUD: You exchange Australian Dollar to US Dollar.

Here are the six major currencies which are traded most frequently and have the most liquidity:

  1. EUR/USD
  2. GBP/USD
  3. AUD/USD
  4. NZD/USD
  5. USD/CAD
  6. USD/JPY

Let’s continue…

FxPro cTrader trading for beginners: How to read the Forex currency pair with ease even if you’re not familiar with trading

There are probably numbers that look like those…

EUR/USD 1.1792

GBP/USD 1.5255

USD/JPY 113.22

You’re thinking…

“What does this numbers have to do with them?”

Well, let me explain…

For instance:

If you find EUR/USD 1.1792 that means one Euro equals $1.1792 US Dollars.

When you find GBP/USD 1.5255 this means that 1.25 British Pound equals $1.5255 US Dollars.

If you find USD/JPY 113.22 This means that one US dollars is equivalent to $113.22 JPY.

Is it logical?

Good. Let’s move a step higher…

What is pip?

Here’s the deal…

A Forex currency can be traded in units known as pip (price value of an interest), which are the lowest value of an exchange.

The majority of Forex pairs are listed on the fourth fourth decimal place, with the exception for JPY pairs that are quoted on the 2 2nd decimal spot.

That means that for each 0.0001 fluctuation in prices it’s a 1 pip movement.

In the case of JPY pairs, for every 0.01 changes in value it’s a pip change.

Exemple 1:

If the EUR/USD pair is being traded at 1.1802 and one hour later it’s trading 1.1807.

What was the cost rise?

5 pips.

Example 2.

If USD/JPY is trading at 120.55 and one hour later they’re trading around 120.15.

What was the cost? How much did it drop?

40 pips.

There’s one final thing you should be aware of when understanding the language of a exchange rate…

What’s the definition of the spread?

It is the spread between Bid and the Ask.

You’re probably asking:

“What is Bid and What’s the Do you want to know?”

Good question.

It is the Bid is the value you are able to sell your house for in the present (always the lowest value).

It is the amount that you can get today (always the highest price).

Also, if you notice an exchange rate that is similar to EUR/USD, it’s likely to be at 1.1551/1.1552.

That means that if you decide to sell USD/EUR now you can sell it at 1.1551.

If you are looking to purchase USD/EUR now, you can purchase at 1.1552.

The spread is the commission your broker receives by selling your information (think about it in terms of the cost of a transaction).

Now…

If you’re just beginning to learn about trading, these may appear to be an overwhelming mess.

Since this is exactly what I felt like when I first started Forex trading. However, I assure you that eventually everything will be clear.

Now let’s get moving…

Forex trading for Beginners: How to understand the Forex currency pair like a pro , even you’re a novice to trading

There are probably numbers similar to this…

EUR/USD 1.1792

GBP/USD 1.5255

USD/JPY 113.22

You’re wondering…

“What is the significance of these numbers have to do with them?”

Well, let me explain…

For instance:

If you find EUR/USD 1.1792 that means one Euro equals $1.1792 US Dollars.

In the case of GBP/USD 1.5255 this means that 1.25 British Pound equals $1.5255 US Dollars.

If you find USD/JPY 113.22 This means that one US Dollar is $113.22 JPY.

Do you think it makes sense?

Good. Let’s move a step higher…

What is pip?

Here’s the truth…

A Forex currency can be traded in units known as pip (price points of interest) that is lowest value of an exchange.

The majority of Forex pairs are listed on the fourth 4 decimal place, with the exception for JPY pairs that are quoted in the 2 2nd decimal spot.

That means that for each 0.0001 fluctuation in prices it is a one pip movement.

When it comes to JPY pairs, for every 0.01 changes in value it’s a pip change.

You may also like

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More