Trading currency tips explained by ForexSQ team, In this article you will know what is trading currency online, how to do trading currency for dummies and how to start trading currency for profit in FX market. You will also know about the best online trading currency brokers and how to open your Forex account free and practice foreign exchange trading with a demo account free.
What Is Trading Currency Tips
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The word Forex is a combination of two simpler words Foreign Exchange . The simple meaning of Forex Trading is exchange of foreign currencies to make money online.
Foreign exchange, commonly known as ‘Forex’ or ‘FX’, is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market.
Foreign exchange is the world’s most traded market, with an average turnover in excess of US$5.3 trillion per day.
trading currency online market is where currencies are traded online to make profit.
Fx Trading market is like any other markets where goods are traded.
The only difference between the Forex Trading market and any other markets is that goods are bought and sold in other markets whereas currencies are bought and sold in the Forex trading Market .
For example, you can buy euro by paying AUD (Australian Dollars) or you can buy JPY (Japanese Yen) by paying US dollars.
Currencies are treated like goods in the Forex trading market. Now you know a little about what is Trading currency tips but its not enough, continue below to know more about online trading currency for dummies and how to do online trading currency for profit.
Currency Trading Hours
Fx Trading is done in the first five days of the week starting from Monday and do not stop for a second till the end of Friday. Retail Forex traders also can trade currencies online from Monday to Friday.
It means Forex Trading is done 24 hours in all five days. The best Foreign exchange players in Forex Trading market are large banks, large international corporations and best Fx brokers.
Different Types Of Currency Pairs
The main concept of the Online Fx market is the “free-floating” currencies. “Free-floating” currencies are those currencies that are not supported by any specific materials like gold or silver.
The profit and loss in Forex Trading market is based on the changes in the value of currencies.
The two widely traded currencies of the Forex market are the US dollar and the Euro. These two currencies are considered as the king of the currencies.
Some other reputed currencies of the Forex Trading market are the Japanese Yen, the Canadian Dollar, the Australian Dollar and the New Zealand Dollar.
Online Currency Trading Leverage
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Forex is a leveraged product, which means that you are only required to deposit a small percentage of the full value of your position to place a Fx trade.
This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading.
In Fx, traders use leverage to profit from the fluctuations in exchange rates between two different countries.
The leverage that is achievable in the Fx market is one of the highest that investors can obtain.
Leverage is a loan that is provided to an trader by the Forex broker that is handling his or her Fx account.
When an investor decides to invest in the Fx market, he or she must first open up a margin account with a broker.
Usually, the amount of leverage provided is either 50:1, 100:1 or 200:1, depending on the broker and the size of the position the investor is trading.
Standard trading is done on 100,000 units of currency that call one Lot, so for a trade of this size, the leverage provided is usually 50:1 or 100:1. Leverage of 200:1 is usually used for positions of $50,000 or less.
To trade $100,000 of currency, with a margin of 1%, an trader will only have to deposit $1,000 into his or her margin account.
The leverage provided on a trade like this is 100:1. Leverage of this size is significantly larger than the 2:1 leverage commonly provided on equities and the 15:1 leverage provided by the futures market.
Although 100:1 leverage may seem extremely risky, the risk is significantly less when you consider that currency prices usually change by less than 1% during interaday trading.
If currencies fluctuated as much as equities, brokers would not be able to provide as much leverage.
Trading Currency For Profit
All FX is quoted in terms of one currency versus another. Each currency pair has a ‘base’ currency and a ‘counter’ currency.
The base currency is the currency on the left of the currency pair and the counter currency is on the right.
For example, in EUR/USD, EUR is the ‘base’ currency and USD the ‘counter’ currency.
Currency price movements are triggered by currencies either appreciating in value (strengthening) or depreciating in value (weakening).
If the price of EUR/USD for example was to fall, this would indicate that the counter currency (US dollars) was appreciating, whilst the base currency (Euros) was depreciating.
When trading Forex prices, you would buy a currency pair if you believed that the base currency will strengthen against the counter currency.
Alternatively, you would sell a currency pair if you believed that the base currency will weaken in value against the counter currency.
Trading Currency Pips
Pip stands for Percentage in Points. Most of our currency pairs are quoted to 5 decimal places with the change from the 4th decimal place (0.0001) in price commonly referred to as a ‘pip’.
For example, if the price of the EUR/USD currency pair moved from 1.33800 to 1.33920, it is said to have climbed by 12 ‘pips’ (92-80=12).
What Is Spread In Online Currency Trading
The difference in the BID/ASK of the currency pairs is referred to as the ‘spread’. An example would be EUR/USD dealing at 1.33800/1.33808 (in this case the spread is 0.8 pips or 0.00008).
The exceptions to this are the JPY pairs which are quoted to just 2 decimal places. A USD/JPY price of 97.41/97.44 displays a 3 pip ‘spread’.
How To Trade In Foreign Currency Market
To trade in foreign currency market you need to download an online trading platform and to download a trading platform free you need to sign up with a Fx broker to open a demo Forex account free and start online currency trading.
How To Open Fx Account With Top Forex Brokers
To open online currency trading account and start trading currencies online you need to a foreign exchange broker, Its hard for traders to find the best forex broker as there are more than one thousand brokers in the markets from countries like UK, US, Swiss, Australia, Cyprus, Dubai and many other countries, also most of them are not regulated so ForexSQ team made a list of the best online brokers to open fx trading account and start demo or real online fx trading.
Online Trading Currency For Dummies Infographic
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