Free Tutorial Options Trading


Free Tutorial Options Trading
Free Tutorial Options Trading

Free Tutorial Options Trading


Friday

Forex Trading Tutorial - Start Here

Forex Trading Tutorial - Start Here



Forex may seem simple, adhering to the buy low/sell high principal. If you expect Forex trading to be an easy endeavor that will net large sums of money, you're in for a big surprise. Underneath the alluring potential to make huge profits are processes that make the foreign currency trading system work. This Forex trading tutorial will help start you on the path to discovering these Forex basics. Forex isn't simple, but its possibilities are substantial.

Let's start this Forex trading tutorial with the basic unit of foreign currency exchange, 'currency pairs.' Currency pairs are the currencies that will be involved in a trade. Let's say you want to buy British pounds with your US dollars. You would look at the GBP/USD currency pair. If you wanted to buy Japanese Yen with Euros, you would look at the JPY/EUR currency pair. Put simply, the first currency listed, the base currency, is the currency you wish to purchase while the second currency, the quote currency, is the currency you wish to sell to buy the other currency.

Getting the pairs in the correct order is important. The base currency will always be listed first, quote currency second. When a broker or Forex trading website lists a currency pair, it will list the exchange rate like JPY/USD=0.0094. This means that if you were purchasing Dollars with Yen, one Japanese Yen will buy less than one US penny. However, if you wanted to buy Yen with Dollars, the currency pair would look like USD/JPY=105.33, or 105.33 Yen for one Dollar. Imagine the turmoil that could cause if you mixed your bases and quotes up!

There is another important reason to get your currency pairs in the correct order. It has to do with the 'spread' of a currency. When Forex trading, a currency will have two values when compared to another currency. The bid price, or the exchange rate, is the rate at which one currency can be traded for another. The ask price is the price the market wants for a currency. The difference between the bid price and the ask price is called the spread. Whenever you buy a currency, you will be subject to spread.

This Forex trading tutorial will now put the spread factor into an actual trade. Say the USD/JPY exchange rate is 105.33, while the asking price is 105.32. The spread of 0.01 Dollars will come out of your pocket. When Forex trading, the spread of a currency must be considered when making trades, otherwise profits will be less than expected. Worse, an unsuspecting trader could be hit with a loss.

There are many other factors in the foreign exchange market. This Forex trading tutorial will not get into the more intricate pip values and other Forex terms. However, anyone considering Forex investing should further study on the other aspects of trading in order to become successful.

Peter Flemming is a professional Forex Trader and is a staff writer for a Forex website about learning Forex trading and trading education. Download a copy of our ebook for Forex beginners today!

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Source: create-money24658.blogspot.com

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