A complete newbie to forex trading, I am having difficulties figuring out where to look for information, but also what exactly to look for. Commodities? Bank quarterly results?
So, you want to learn how to trade currencies in the forex market? The process of trading currencies appears very straight-forward on the surface, but there's more to it than meets the eye.
Currency trading tutorial is about to receive here will give you a basic idea of how things work. However, it should be noted that this tutorial is only scratching the surface. The Forex market is complex, fast and requires more seriously if you want to trade successfully.
Now that we have that the waiver form, let's start by examining the fundamental unity of all those involved in trade: the "currency pair.
What are currency pairs?
Currency pairs are units of two currencies involved in forex trading. For example, if you want to sell U.S. $ to buy euros, which would be in the exchange rate quoted for the EUR / USD. Or, if you wanted to sell Euros to buy U.S. dollars, which would be in the exchange rate quoted for the USD / EUR currency.
You may think, "Are not they the same thing?" Well, most are, but we must look to the right partner, in the correct order, based on the currency you are buying.
There are two reasons for this:
First, it is easier to calculate the results of their exchange in terms of how much of the base currency can be bought with the currency of your 'date'. Your base currency is the currency you intend to buy, and the quote currency is the currency you intend to sell for the base.
When quoting an exchange rate, your broker will list the base currency for the first time the couple and the second currency quoted.
This means that when you see a pair like EUR / USD, which is seeing the cost of 1 euro in U.S. dollars. A listing of the exchange rate of EUR / USD = 1. 4436 means that 1 euro costs U.S. $ 1.4436 Dollars.
Similarly, the USD / EUR pair indicates the cost of U.S. $ 1 in euro terms. An exchange rate of USD / EUR = 0.6834 means that one U.S. dollar costs 0.6834 euros.
The second reason to observe the correct buy / sell ordered pair is that you want to know the difference between the "bid price" the (exchange rate) and the selling price (what the market makers want to currency).
The difference between bid price and the price they ask what is known as "diffusion." Forex traders are subject to spreads when opening or closing operations in the buying. In other words, they are always subject to a margin when they buy, whether to open or close the trade.
Open buy - Dissemination>
Near sell -> no spread
Open sell -> no spread
Close to shopping - broadcast>
Say you want to buy the EUR / USD. The bid price is 1.4436. The price may be something like 1.4440. You must pay the spread of 0. 0004 to make the trade.
Those are the basics of currency trading, but there are other factors to consider. In order to make a profit in the foreign exchange you should also know how to calculate the cash value of exchange rate fluctuations in terms of "points" - or, in the jargon of the currency - 'pips value.
This currency trading tutorial does not cover the values of pips, but it is a concept that should be investigated further if you want to master the basics of trading in the forex market.