Basics of Forex Trading – Must-Know Specifications
Friday, August 21, 2015, 6:00 PM | Leave Comment
Probably, you become a witness of discussions over currency movements often. This going up and down of currencies has brought big money to specific investors. These are the financial investors and what they are doing is Forex trading.
If you desire to be like them, learn these must-known Forex trading specifications as a start.
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What The Heck Is Forex?
The very first thing you need to understand is what Forex is. The easiest way for us to determine this giant and constantly changing world is by accepting it as an environment.
This is the financial environment, where financial investors we have already mentioned and respectively – you, quite soon – are trading, making money and earning their living (some of the investors earn even more, of course).
In general, Forex is the exchange market, where the up and down of all the currencies are presented and where you buy and sell to profit from these changes.
Naturally, this is the shortest explanation we can give about Forex, because, as a matter of fact, there are many things that can be said about it. And they are quite interesting and enriching.
You can learn more about Forex here. (https://en.wikipedia.org/wiki/Foreign_exchange_market)
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How Does Forex Market Work To Bring You Money?
Forex market is opened 24 hours during the day, but it closes in Friday to have a rest during the weekend.
At working days investors buy foreign currencies or sell such. The main goal they have is to profit from the difference between the value of the bought currencies and the value of sold ones later.
Currency – whether standard USD or RUB (Russian Rouble), for instance – is traded in a lot that might have different size.
The lot is composed of units of the currency. But besides lots, there are some other terms you should know in advance to get to the base in Forex trading.
You can receive superb Forex trading education for free here at www.forexlessons.org
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Pairs and Pips in Forex Trading
Pairs and pips are general and classical terms in Forex trading. A pair consists of two currency types and usually they are standardized like EUR/USD – the most popular currency pair.
The more pairs a broker you are dealing with has, the better and the more profitable it is.
On the other side, a pip is the factor that shows how much you lose or win. Let`s take EUR/USD pair again.
Imagine, in Monday its rate was 1.5200 and in Tuesday it became 1.5203. The sudden rise of this pair is 3 pips.
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Leverage in Forex Trading
Leverages in Forex trading might be seen written like this: 400:1, 500:1 and etc. Leverage is the helping link for both – investors and the broker to invest in order to operate on the financial market.
Have in mind that most traders buy with borrowed money. Due to this can finely get the best of leverage regardless its value.
Though, meanwhile, there is a big chance for some traders with poor experience to have more losses with leverage, so it is not the safest toy to play with actually.
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How To Being Trading in Forex?
Speaking of brokers, you cannot participate in Forex market without using the services of a broker.
Traditionally, this is an online website, where you are offered with the currency pairs and their movements as to the prices.
When you open an account in such a broker, you deposit an amount of money as an investment to buy and then, to sell.
As a conclusion, here is one warning from us – don`t think that Forex things and activity are as easy as the explanation above.
These are only the basics. And if you really want to make money, decent education and preparation in advance are 100% needed.
So better do not invest your money in vain, but have a solid preparation to support your Forex experience later!
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