How to Trade Forex? It's a Piece of Cake!
How to trade Forex? Trading Forex is a snap. It might be hard to believe, but Forex trades merely consist of selecting one of the currency pairs, selecting the amount of the base currency, and defining whether you would like to buy or to sell at that time. Once you have placed your first order, you will merely have to wait for a time to exit your transaction at a profit. How to trade Forex profitably? Learn the main rules of Forex trading.
Demo Account Trading
Trading with a demo account is definitely one of the easiest ways to learn how to trade Forex. A Demo account will safeguard you from incurring any real losses while making mistakes at the time of your trading. At first, you will most likely often make mistakes when selecting the time of entering and exiting the trades, such as you may be too late or too early. Mistakes that you make while trading on a demo account will not cost you a dime. However, if you skip this essential step, you may join the 90% of failing Forex traders.
Currency Pairs in Forex Trades
Currency pairs represent two currencies paired together against one another. Which currency pair to choose from the multitude of currency pairs? Its probably a good idea to start with the most traded currency, which is nowadays USD/EUR. Try to first understand the traits, which are unique, particularly for this currency pair. How does this currency fluctuate? What may be the reasons of the fluctuations? Which currency in this pair seems to be going up and which seems to be going down, and why? Every currency pair has different reasons for fluctuations. It is better to learn one currency pair before advancing to the next one. Study the currencies and currency pairs, and you will be well on the way to learning how to trade Forex.
Currency Quotes
Forex trades are always based on currency quotes. Currency quotes are two-sided, consisting of the bid price from one side and the ask price from the other side. Bid represents the selling price of the base currency, when concurrently buying the counter one. Ask represents the purchasing price of the base currency, when concurrently selling the counter one. Good grasp of currency quotes is essential for learning how to trade Forex.
First currency in the quote is the base currency, and second currency is the counter currency (also called quote currency or terms currency). In the example of the USD/EUR currency pair, USD is the base currency and EUR is the counter currency. The value of the base currency is always 1. The value of the counter currency is calculated against the base currency, i.e., 1 USD = 0.7422 EUR. Prices in the terms of quotes are expressed through pips, which are usually the 4th decimal point. Once you understand the currency pairs, you will be well on your way in the process of learning how to trade Forex.
Understanding Leverage and Margins
Leverage allows you to trade with not much of your own money. It's very pleasant to realize that you can trade with a lot more money than what you really have. Imagine the possible profits? It's breath-taking, isn't it? Well, now turn your imagination on and try to imagine the possible losses. It's spine-chilling, isn't it? Many dealers advertise margins with up to 100:1 leverage. What does it mean? It means that if you are trading with many lots and the market goes against you in most of the lots, your losses will be horrific. Do not just learn how to trade Forex, do so without incurring losses.
No matter what dealers may say, they often do not care much about the outcome of your trades. Dealers are similar to banks, which are willing to provide you with a loan, and they do not care much if you will lose your property for example. You will still have to pay back the loan, as well as the interest to the bank. You should try to never trade on a margin since the outcome may be frightening. You should consider trading on a margin only after you gain sufficient knowledge of how to trade Forex.
It's very easy to learn how to trade Forex. However, how to trade Forex with a profit? Allow enough time to train on a demo account before proceeding to real-life trading. - 23200
Demo Account Trading
Trading with a demo account is definitely one of the easiest ways to learn how to trade Forex. A Demo account will safeguard you from incurring any real losses while making mistakes at the time of your trading. At first, you will most likely often make mistakes when selecting the time of entering and exiting the trades, such as you may be too late or too early. Mistakes that you make while trading on a demo account will not cost you a dime. However, if you skip this essential step, you may join the 90% of failing Forex traders.
Currency Pairs in Forex Trades
Currency pairs represent two currencies paired together against one another. Which currency pair to choose from the multitude of currency pairs? Its probably a good idea to start with the most traded currency, which is nowadays USD/EUR. Try to first understand the traits, which are unique, particularly for this currency pair. How does this currency fluctuate? What may be the reasons of the fluctuations? Which currency in this pair seems to be going up and which seems to be going down, and why? Every currency pair has different reasons for fluctuations. It is better to learn one currency pair before advancing to the next one. Study the currencies and currency pairs, and you will be well on the way to learning how to trade Forex.
Currency Quotes
Forex trades are always based on currency quotes. Currency quotes are two-sided, consisting of the bid price from one side and the ask price from the other side. Bid represents the selling price of the base currency, when concurrently buying the counter one. Ask represents the purchasing price of the base currency, when concurrently selling the counter one. Good grasp of currency quotes is essential for learning how to trade Forex.
First currency in the quote is the base currency, and second currency is the counter currency (also called quote currency or terms currency). In the example of the USD/EUR currency pair, USD is the base currency and EUR is the counter currency. The value of the base currency is always 1. The value of the counter currency is calculated against the base currency, i.e., 1 USD = 0.7422 EUR. Prices in the terms of quotes are expressed through pips, which are usually the 4th decimal point. Once you understand the currency pairs, you will be well on your way in the process of learning how to trade Forex.
Understanding Leverage and Margins
Leverage allows you to trade with not much of your own money. It's very pleasant to realize that you can trade with a lot more money than what you really have. Imagine the possible profits? It's breath-taking, isn't it? Well, now turn your imagination on and try to imagine the possible losses. It's spine-chilling, isn't it? Many dealers advertise margins with up to 100:1 leverage. What does it mean? It means that if you are trading with many lots and the market goes against you in most of the lots, your losses will be horrific. Do not just learn how to trade Forex, do so without incurring losses.
No matter what dealers may say, they often do not care much about the outcome of your trades. Dealers are similar to banks, which are willing to provide you with a loan, and they do not care much if you will lose your property for example. You will still have to pay back the loan, as well as the interest to the bank. You should try to never trade on a margin since the outcome may be frightening. You should consider trading on a margin only after you gain sufficient knowledge of how to trade Forex.
It's very easy to learn how to trade Forex. However, how to trade Forex with a profit? Allow enough time to train on a demo account before proceeding to real-life trading. - 23200
About the Author:
About the author: Steve Maenshel can you help you navigate how to trade the forex markets. For more forex trading information, visit his forex resource center.
posted by X - Men @ 2:49 AM
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