Currencies are traded in dollar amounts called "lots". At
100:1 leverage, one lot is equal to $1000 which controls $100,000
of a given currency. This leverage is known as "margin" and some
brokers will allow traders even higher leverage than 100:1. This
superhigh leverage is one of the reasons that Forex trading has
become so popular.
Currencies are always traded in pairs. Each pair has unique
notation that expresses which currencies are being traded. The
symbol for a currency pair will always be in the form ABC/XYZ.
ABC/XYZ is not a real currency pair, just an example of how
currency pairs are stated in the market. In this particular
example, ABC is the symbol for one country's currency and XYZ is
the symbol for another country's currency.
Listed below are some common symbols used. There are symbols
for other currencies as well, but these are the most commonly
traded ones.
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPN - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
As mentioned earlier, currencies are traded in pairs in Forex
trading. Thus, a trade always compares one currency to another in
terms of how the two currency prices will move relative to each
other. Some of the common pairs traded are:
EUR/USD Euro / US Dollar
USD/JPY US Dollar / Japanese Yen
GBP/USD British Pound / US Dollar
USD/CAD US Dollar / Canadian Dollar
AUD/USD Australian Dollar/US Dollar
USD/CHF US Dollar / Swiss Franc
EUR/JPY Euro / Japanese Yen
When you place an order to buy the EUR/USD, you are actually
buying the EUR and selling the USD. If you were to sell the pair,
you would be selling the EUR and buying the USD. So if you buy or
sell a currency pair, you are buying/selling the base currency.
You are always doing the opposite of what you did with to base
currency with the counter currency. In Forex trading, currencies
are traded on a price interest point (know as a "pip")system.
Each currency pair has its own pip value. Since we have a listed
currency pair (i.e., EUR/USD, EUR/AUD), we need a way to talk
about its associated number or price. When you see a price quote,
you'll see something listed like this:
USD/JPY: 118:51/55
The first component (before the slash) refers to the bid price
(what you obtain in JPY when you sell USD). In this example, the
bid price is 118.51. The second component (after the slash) is
used to obtain the ask price (what you have to pay in JPY if you
buy USD). In this example, the ask price is 118.55. The
difference between the bid and the ask price is referred to as
the spread. In the example above, the spread is .04 or 4
pips.
Chuck Cox is a Technical Writer and Industrial Scientist by
professional with a background in statistics. He has used
mathematical and statistical methods to invest and trade in the
stock, futures, and options markets. Chuck has owned various
businesses and presently operates several websites. To learn more
about trading the markets, visit his website, http://www.earncashathometoday.com/trading-FOREX.htm
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Trading Tips No 1: Learn
How to Trade The Moment of Truth
So you have learned how to trade the markets by mastering a
few trading tools like Moving Averages, Channels,
Stochastics, MACD, or RSI - that is a great accomplishment
achieved by only a few. However, having the tools and rules
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Advantages of Trading
FOREX Over Stocks and Commodities
There are many advantages to Trading FOREX as your main
income generator. Let's start by something that may be
worrying you already.
Where is the Market
Going?
If you ask me whether the market will have moved up or down
by this time next year, well I may as well flip a coin,
because I don't know. If you ask me whether the market will
have moved up or down by this time next month, well again,
I may as well flip a coin, because I still don't know.
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My father, who owns a small parts store and garage for
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droned on and on about how he is getting killed by the
Euro. Confused as to how the Euro could possibly be
affecting his small and seemingly insignificant business, I
asked him how.
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Regarding Forex Options Brokers?
Forex option brokers can generally be divided into two
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option trading platforms and forex brokers who only broker
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dealing/brokerage desk. A few forex option brokers offer
both online forex option trading as well a
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orders through a live forex option broker.
Stopping
Yourself
I read on a bulletin board a traders comment that on his
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therefore he would be trading with a wider stop in future.
Types of Foreign
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You need more than just going to a free stock market
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break even.
Forex Broker Involvement
Optional
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Writing A Trading
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Where to Get Forex
Training
For those of you who are interested in forex trading, you
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Mechanical or
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basis.
How to Trade
Currency
We all know when you go on a trip to another country; you
need to take some travelers checks and some cash in the
currency of that country. This can be advantageous because
one country's currency is usually worth more or less than
the other.
Day Trading Course or
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Education
Profitable day traders recognize that momentum trading is
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MORE RESOURCES updated Sat. February / 04 / 2012
