What A Beginner In Forex Trading Should Know
By Bart Icles
The foreign exchange (forex) market is undoubtedly one of
the most liquid financial markets in the world with a daily
volume of more than 3 million U.S. dollars. Because of this
very liquid nature of the forex market, a lot of people from
all walks of life are being enticed to try their luck in
forex trading, hoping to double, triple, and - if really
lucky - exponentially grow their money through it. For some
people, it can be a very lucrative venture. For majority,
though, if not done correctly and wisely, it can result to
Since forex trading is speculative in nature, that is, a lot
of its activities are largely based on guided speculations,
there is only a low percentage of market activity that
represent companies' and governments' fundamental currency
conversion needs. This is the reason why if you are
intending to do forex trading, you yourself should know
everything about it.
To avoid the losses, you should be able to know all that you
need to know about forex trading. The best approach to this
is to ask for an experienced forex trader's help in
understanding the different areas that you need to know
about the forex market, from the most basic down to the most
complicated strategies that you can be able to employ when
you finally venture out into forex trading yourself.
If you are a beginner in the forex trading world, here are
some of the things that you definitely need to know about:
1. A pip (percentage in point) is the smallest price
increment in a currency involved in the forex trading world.
They are calculated per currency pair. For example, when you
are trading US dollars/Swiss Francs with US dollars as the
base currency, whenever it rises or falls, there will be a
movement on pip values.
2. The major currencies being traded online are AUD, GBP,
CHF, USD, JPY, EUR, and the CAD. Other currencies are
considered minor currencies.
3. The first currency in the pair is called the base
currency while the quote currency is the second currency
pair. For example, in trading CAD/USD, CAD is the base
currency while USD is the quote currency.
4. Transaction costs are often higher when trading cross
currency. Cross currency is a pair that does not involve the
USD. It requires more skills in knowledge when trading cross
currency since it is more complicated.
These are basically the basics in forex trading. Of course,
you should not be limiting your knowledge to these basics
since the forex trading world is full of twists and turns
that would require knowing different techniques and
The best forex
strategy starts with a desire to learn and a drive to become
a great trader. Learning
blade forex strategies takes dedication and a good teacher.
But once you learn how to trade and do so successfully your
life will change and you have options and financial
resources you never had before.
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