The crux of Forex trading

Forex, FX, currency trading or foreign exchange transactions are the best known names, which generally can be summarized as a theory online on the relative estimates of economic types according to the method for a trading account.

This article will cover in a couple of sections key Forex trading practical details, using clear terms and in the midst of its trading operations online, become the basis of fundamental information on a type of essential vocabulary Forex in basic exchange standards currency and distinguish the main monetary instruments available for a retail trader.

However, before going into the practical details of Forex Trading, from the structure we have today, we will wrap to reveal and understand where the forex exchange originated.

Opening a Forex Account

Birth currency market

In the decade of the 50 financial forces in the world they understood that global trade was becoming essential in the era of competitive advantage. World economies began to understand that the universal exchange as a means to raise capital was inexorably becoming a basic, non-violent method, instead of being a method of warfare and success. Quickly, much of the innovative advances in information transfer and international logistics of the 20th century, had made the world a smaller place, delivering major systems to encourage all universal exchange that could crave. For the 70 it needed a simple strategy that allowed move cash around the world.

In much of our monetary history, even after the development of money printed in China in the 11th century, governments to ensure the estimation of their money, they hoped that there was a similarity in weight between their national currency and economic resource was recognized on regular basis. First came the grain and then for a long period, it was gold equivalent. As you can imagine, this forced the real limits on the pace of monetary development. In 1971 the President of the United States, Richard Nixon, resigned at the highest level, which had supported the conversion of the dollar since the end of the 2nd World War, allowing the dollar was kept afloat and having their own assessment against different monetary rates and gold. How long the banks can make cash or credit without the requirement of a backup resource basically nothing?

Finally, these improvements allowed the realization of a shopping mall decentralized exchange that allowed money exchange operations, necessary based on import tariff limitless economies.

Forex What made it what it is today? That there was a further financial development and innovative progressions. Watch the Internet! Particularly, the integration of each electronic device in the world.

Apparently, one of the greatest achievements in computing the period was, among other things, digitize our money. In the unlikely event that paper money could make credit be transferable from one individual to another through direct trade in a ticket, advances in internet made a recognized exchange was as simple as clicking the mouse of the computer or play the screen. Initially, the Internet joined together a couple of computers, then a couple of nations and now more than 3 billion people. In the 90s it was perceived as a huge door open and were developed to empower organizations access to the foreign exchange market and records were used to establish the framework of markets, equivalent today to retail Forex trading. These organizations became known as Forex broker and account for them is that today anyone with only $ 50 in his pocket and an online platform can test your skills or try their luck in the Forex market.

This allowed Forex become the most famous in relation to the number of traders and trading operations carried out with the greatest volume, although in economic markets, Forex is the "youngest".

These are the essential records of the Forex market.

Like other progressions of the time, the foreign exchange market grew to satisfy a need. Initially it served to promote trade of money needed by the explosion currency trading worldwide. This change was driven by the mechanical development and the defection of the highest level, which benefited genuinely liquidity.

Although initially overseas trade evolved into business management worldwide, today more than 80% of Forex trades are speculative.

Learning the basics of Forex trading. Terms and concepts.



Know only the language of brokers do not become a decent trader, however, will help process the data stack needed to become one.

Currency trading or Forex - is a decentralized global market where currency trading takes place. In fact, the business of Forex currency market mix cash with the futures market and futures market.

The "spot market" is the biggest piece of cake and manages Forex currency prices and fast operations - on the spot. Although the other two markets are less known for a non-traditional trader, still worth mentioning. Both the "futures market" as "futures markets" handle transactions which are settled at a certain date, perhaps in a month or in eighteen months. The futures market is used for operations with modifications, while "futures markets" includes contracts.

The currency pair - is a key idea from the rudiments of the Forex trading transactions. To simplify and in connection with the foreign exchange market, think of the pair as a solo instrument money. For example, EUR / USD.

Forex Demo Account

The main currency in this pair is the Euro, called - base currency. The second is the US dollar, called - quote currency. Forex trading is obtained from the value of the base currency relative to the quote currency.

When taking a look at EUR / USD or other quoted in your trading platform value, you will see two numbers - the purchase price or offer and the selling price or demand, like this: EUR / USD 1.1234 / 1.1240 . This quote implies that you can buy 1 Euro for 1.1240 US dollars, claiming that the bank is applying amount - the selling price. Alternatively, you can offer one Euro for 1.1234 - the purchase price. Notice how a bank will buy money safely, to a somewhat lesser value and offer it at a price marginally higher. Banks can do that, because they usually have more power to exchange a broker. After all, they did not come to negotiate with you - you did.

To be totally objective, you can not bid or buy EUR / USD, as you would, for example, to acquire or offer shares in an organization, essentially arguing that there is no such thing as the EUR / USD - currencies are completely alone, not as accomplices of a pair or cross. So what it is what actually happens when your trading platform presses a purchase price or make an offer? After all, without a doubt, an absolute monetary and specialized wonder.

Pressing the buy button, your broker takes a small amount of trust your trading account as collateral for the operation that follows: buy euros and sell US dollars. Before long, waiting for the market to move in the direction planned, the euro has increased its quality against the US dollar, while it separately weakened against the euro. the order is closed. At this time, his representative reoffered the euro rose in value, as it has the ability to buy back more than the US dollar is devalued.

On the other hand, when you place a purchase order, the representative first offer euros for dollars, anticipating that the US dollar against the euro can appreciate. You must wait for the dollars are appreciated and then re-buy at the level that decides to close the operation.

Two things you should consider. For starters, traders can offer coins that do not actually possess. Second, in any operation it occurs both a purchase and a sale - the two sides of a coin is the exchange of currencies.

These are the essential technical aspects of Forex trading.


essential terms of Forex

A pip or point - is a basis for progress in the evaluation unit price and at the same time, among the basics of Forex, is an important principal term. When the purchase price for the EUR / USD rises from 1.1234 to 1.1235, 1 pip is.

The pips are the direct route for a broker to assume a benefit or a misfortune, as the estimate of a pip depends on the volume of operations.

The volume of transactions - is the size of a position available sales transaction, measured in parts. A volume of operation are 100k 1 lot of money to be invested, a pip increases to 10 lots of the listed currency. For example, when operating with 1 pip EUR / USD, 1 pip equals $ 10.

Spread - is the difference between the purchase price or offer and the selling price or demand. As we read earlier, it includes a currency quote two prices - the purchase price and the selling price. The price is consistently higher than the purchase price, from many points of view is why economic trade has much to do with the timing as well as with the assessment. The Spread is the motivation behind why constantly at the beginning of an operation not much negative P & G. One of the essential elements of Forex is that the price has to fluctuate so that traders can increase their profit.

The Spread is inherent if part of a food chain Forex. It's over when passing a liquidity provider to broker a broker and a trader. Has two qualities - can be fixed or floating (variable), the latter is used by most contemporary brokers. A floating spread is a more accurate picture of what is really happening in the market reflection - prices vary because the currency is liquid. Change in supply and demand. To a large extent, these essential elements of Forex trading deal with liquidity and a little instability. When the Forex market opens week on Sunday night (GMT), the spread is usually higher due to the default of players present number - this is known as a business minor, because the volume of trade and the amount of members, for example, increases in a midweek night, limiting the spread.

Also, the spread may increase when important news occur on the value, for example, during broadcasts of critical financial information.

Margin - in a nutshell is the real money. An average retail Forex trader simply no scope for directly foreign exchange operations. You can enter with around 100,000. That is why in the purchase and sale retail margin deposit from a customer or are leveraged.

Leverage - is another key to understanding the essentials of Forex trading term. Leverage is the money multiplier. Financial leverage 1: 100, offered by the broker, is what can turn a $ 100 into one that can control a currency pair or cross (crossed pairs) with a value of $ 10,000, so even the smallest fluctuation price is potentially profitable. However, note that leverage is an opportunity that comes with a risk warning, because the amount of margin available will increase or decrease as the value of traded currencies increase or decrease. Therefore, if the market moves against you, affect your account margin available in real time and if the margin is too low, the broker will liquidate loss by being unable to maintain the open position without risk.

What currencies are traded on Forex?



This guide to the essentials of Forex trading would be incomplete without highlighting the most popular assets available to a trader.

The major currency pairs, also known as major currency pairs, combine two of the five most popular world currencies - the US dollar, euro, British pound, Japanese yen and Swiss franc, as follows: EUR / USD, GBP / USD, USD / JPY and USD / CHF.

Notice how they all form a pair with the US dollar.

They are called cross pairs, pairs of compounds with one of the major currencies currencies, but they do not have the US dollar: EUR / GBP, GBP / JPY, CHF / GBP and so on.

There are other three common national currencies in foreign exchange transactions - the New Zealand dollar, Canadian dollar and Australian dollar. These coins can form a pair with the US dollar: NZD / USD, CAD / USD and AUD / USD and it will be a group of secondary currency.

Other currency pairs in the Forex market are known as exotic currency and represent less than 10% of all Forex transactions.

To conclude, in the case of this article is the first step on the way to learn the basics of Forex trading - do not stop here. It is a successful businessman who is in a constant search for information. When finished with the basics of Forex trading immediately pass the most advanced traders material.