As a beginner, you should not be in a rush to start trading Forex. The fact is that it is not as easy as you think. The statistics are scary: over 90% of Forex traders consistently fail and eventually quit. We guess you do not want to be one of them. If, indeed, you do not, it is advisable you first take your time to learn the basics.forex trading for beginners,Forex Beginners,currency pairs,forex trading for beginners in india,Tips for Forex Beginners
What is Traded in the Forex Market ?
Currencies. It is the aim of every Forex trader to profit from the differences in the exchange rates of currencies. And this is why currencies are not single traded. Instead, they are in pairs. When you think a particular currency will go up, you buy it. And when you think it will come down, you sell.
In every currency pair, the first currency is known as the base currency while the second is the counter/quote currency. For example, in the pair, EURUSD, the EUR is the base currency while the USD is the counter/quote currency. As a result, a prevailing exchange rate of1.1055 for the pair means that it takes 1 unit of the base currency, the EUR, to buy 1.1055 of the counter or quote currency, the USD.
All the currency pairs in the Forex Market can be grouped into Majors, Minors, and Exotics. The Major Currency Pairs are the most frequently traded. As a result, they are highly liquid, meaning that it is easy to buy and sell them, and they require the lowest costs to trade. All the currency pairs that incorporate the USD are major pairs, and they are;forex trading for beginners,Forex Beginners,currency pairs,forex trading for beginners in india,Tips for Forex Beginners
A Minor Currency Pairis a pair without the USD. Instead, it blends one of EUR, JPY, and GBP,the three major non-USD currencies, with any other non-USD currency. Hence, they are also known as crosses. The Exotic Currency Pairs are the least traded of all and are mostly made up of currencies of the emerging economies. Since both the minor and exotic pairs attract high trading costs, it is highly advised that you trade only the major pairs.
The Forex broker will provide your trading platform. It will also be the one to connect you to the market. Your broker executes your orders for you on your behalf. As a result, you should be extremely cautious in your choice of it. The ideal Forex broker has a user-friendly, neatly-organised trading platform, competitive fees, and a responsive support service.
There must be a term to describe the smallest change in the exchange rate of a currency pair. That term is the pip. It is indicated by the number in the last decimal place of each Forex quote. For example, if you buy the USDJPY at 11.02 and it moves up to 11.05, you would have gained 2 pips.
The monetary value of each pip depends on the type of your account, whether the pair is USD or JPY (Japanese Yen has lower pip dollar values) based, and the amount of leverage you use.On astandard-lot size account which is made up of 100,000 units of the base currency,for example, a pip is worth $10.
On a mini lotwith just 10,000 unite of it, it is $1 and on a micro lot which is made up of 1000 units, a pip is worth just $0.1. Hence, a gain of 1 pip on a standard lot account funded with say $2,000 with 100:1 ($2,000 × 100 = $200,000) leverage will give you 2 lots and dollar value of $20 per pip.
Bid and Ask Priceforex trading for beginners,Forex Beginners,currency pairs,forex trading for beginners in india,Tips for Forex Beginners
If you check every Forex quote, you will see two prices. The first, known as the bid price or simply the bid, is the price at which you want to buy from other traders. The ask price, on the other hand, is the price at which other traders in the market are asking to sell to you.
Usually, there is a slight difference between the two. In fact, it is the joy of your broker that you buy from the market at a slightly higher price and sell to it at a slightly lower price. Why? The broker gets the monetary value of the difference between the two, known as the bid-ask spread, as the fee for the service it renders.forex trading for beginners,Forex Beginners,currency pairs,forex trading for beginners in india,Tips for Forex Beginners
forex trading for beginners,Forex Beginners,currency pairs,forex trading for beginners in india,Tips for Forex Beginners