While traveling abroad, for instance when you go to the US you convert your US dollars for euros and you're participating in the global foreign exchange market. Depending on the demand of the particular currency the value will either push it up or down in relative to other currencies.
Here are some important things about the currency market that help you understand forex trading more:
• In Forex trading, currencies always trade in ‘twos’. When you exchange dollars for euros, two currencies are involved. For every transaction at the foreign exchange, one currency is exchanged in lieu of the other.
• Forex market uses symbols for currencies. For instance, the euro is symbolized by EUR, US dollar as USD, Australian dollar as AUD and British pound as GBP and so on.
• All forex pairs have a standard market price associated with it, which refers to how much of the second currency it takes to buy one unit of the first currency. For example, in case price of EUR/USD is 1.3635 it will cost 1.3635 US dollars to buy one euro.
• The currency pairs will move about 50 to 100 pips, which sometimes depends on the market conditions. A pip is the fourth decimal place in a currency pair. For example, the price of the EURUSD moves from 1.3600 to 1.3650, that's a 50 pip move; if you bought the pair at 1.3600 and sold it at 1.3650 you'd make a 50 pip profit.
• The profit amount earned by a person depends on how much of the currency you purchased. For example, if you bought 1000 units (called a micro lot) each pip is worth 0.1 dollars, so your profit equates to dollars 5 for a 50 pip gain.
• To facilitate trading, the first currency listed in the particular pair is always the directional currency on the price chart forex. For example, if you consider a chart of the EUR/USD, and the price is going up, which means the EUR is moving higher in contrast to the USD.Read Again What is Forex Trading all about? : http://ift.tt/2pig9ng
Bagikan Berita Ini
0 Response to "What is Forex Trading all about?"
Post a Comment