Forex trading basics For Beginner - Support 4 Investment
"Forex" represents foreign currencies and refers to the purchase or sale of a currency in exchange for another. It's the most highly traded market because people, businesses and countries all participate, and it's an easy market to enter without capital1.1 when traveling and converting your US dollars For euros, you 're participating in the global foreign exchange market.
At any time, the demand for a certain currency will push it or decrease in value compared to other currencies. Here are some basics in the currency market so you can spend the next step and start trading on Forex.
Primer currency pairs
Before seizing your first business, it is important to learn currency pairs and what they mean.
In the foreign exchange market, currencies always exchange pairs. When you exchange US dollars for euros, there are two currencies involved. The exchange therefore always indicates the value of a currency relative to each other. The EUR / USD price, for example, lets you know how many US dollars (USD) to buy a Euro (EUR).
The Forex market uses symbols to designate specific currency pairs. The euro is symbolized by EUR, the US dollar is USD, so the euro / u.s. The pair of dollar is indicated as EUR / USD. The other currency symbols commonly traded include AUD (Australian dollar), GBP (Book Book), CHF (Switzerland Franc), CAD (Canadian Dollar), NZD (New Zealand Dollar) and JPY (Yen Japanese) .2 .2
Each pair of Forex will have a market price associated with it. The price refers to the amount of the second currency it takes to buy a unit of the first currency. If the price of the EUR / USD currency pair is 1,3635, it means it costs $ 1,3635 to buy a euro.
Market price: a quick overview
Forex's learning involves getting to know a small amount of new terminology describing the price of currency pairs. Once you have understood and how to calculate your commercial profit, you are a step closer to your first currency trade.
Many currency pairs will move from about 50 to 100 pips a day (sometimes more or less depending on the market conditions). A PIP (an acronym for the point percent) is the name used to indicate the fourth decimal in a currency pair, or the second decimal room when JPY is in the pair. When the price of the EUR / USD goes from 1,3600 to 1,3650, it is a movement of 50 pip; If you bought the pair at 1,3600 and sold it at 1,3650, you would make a 50 pip profit.
The profit you brought about the above theoretical trade depends on the amount of money you bought. If you purchased 1,000 USD units (called microtelle), each PIP is $ 0.10, so you will calculate your profit as (50 pips x $ 0.10) = $ 5 for a gain of 50 pips. If you purchased a unit of 10,000 (mini-ground), each PIP is $ 1, your profit finally ends up $ 50. If you have purchased a unit of 100,000 (standard batch), each PIP is $ 10, your profit is $ 500.
What is the value of each PIP is called "PIP value". For a pair where the USD is listed second, the above-mentioned PIP values apply. If the USD is listed first, the PIP value may be different. To find the PIP value of the USD / CHF, for example, divide the normal PIP value (mentioned above) by the current USD / CHF exchange rate. A micro lot is $ 0.10 / 0.9435 = $ 0.1060, where 0,9435 is the current price of the pair. For JPY (USD / JPY) pairs, go through the same process, but multiplies 100. For a more detailed explanation, see calculate the PIP value in different forex pairs.
For negotiation purposes, the first currency listed in the pair is still the directional currency on a forex price chart. If the price is evolving on EUR / USD, it means that the euro moves stronger compared to the US dollar. If the price of the chart is falling, the euro decreases the value compared to the dollar.
Understanding the above concepts will help you understand what's happening when you see a pair of upstream forex or falls on a graph. If you do the calculation on the difference in pipes between two price points, it will also help you see the benefit potential available from these movements.
The balance does not provide tax, investment or financial services and advice. The information is presented without taking into account the investment objectives, the risk tolerance or the financial situation of a specific investor and may not be appropriate for all investors. Past performances do not represent future results. Investment involves a risk, including the possible loss of capital.
Source www.thebalance.com
