Forex trading currencies
So, you want to learn how to trade currency on the foreign exchange market? The process of trading currencies appears very straight-forward on the surface; but, there is more to it than meets the eye.
The currency trading tutorial you’re about to receive here will give you a basic idea of how things works. The Forex market is complex, fast-paced and requires serious further study if you wish to trade successfully.
What are currency pairs?
Currency pairs are units of 2 currencies involved in a foreign exchange trade. For example, if you want to sell U.S. dollars to buy Euros, you would look at the exchange rate quoted for the EUR/USD currency pair. Or, if you wanted to sell Euros to buy U.S. dollars, you would look at the exchange rate quoted for the USD/EUR currency pair. Your base currency is the currency you intend to buy, and the quote currency is the currency you intend to sell in exchange for the base.
When quoting an exchange rate, your broker will list the base currency first in the pair, and the quote currency second. An exchange rate quote of EUR/USD = 1.4436 means that 1 Euro costs $1.4436 in U.S. Dollars.
Likewise, the USD/EUR pair indicates the cost of 1 U.S. Dollar in terms of Euros. An exchange rate of USD/EUR = 0.6834 would mean that 1 U.S Dollar costs 0.6834 Euro. Forex traders are subject to spreads when opening or closing trades in the buying position.
Open buy -> spread
Close sell -> no spread
Open sell -> no spread
Close buy -> spread
Let’s say that you want to buy the EUR/USD pair. The bid price is 1.4436. In order to make a profit on currency exchanges, you must also know how
to calculate the cash value of exchange rate fluctuations in terms of ‘basis points’ – or, in Forex jargon – ‘pips value’.
This currency trading tutorial will not cover pips values, but it is a concept you should investigate further if you want to master the basics of trade on the foreign exchange.
If you read any material from the great traders you will hear them tell you that discipline is the key to forex profits.
This trading tip is all about acquiring it the easy way and trading for huge profits.
A simple equation for market success is:
A logical trading system + Understanding = Confidence = Discipline
Sounds simple?
Most new traders use illogical systems.
Other fail to understand how and why their trading system works.
They simply follow a guru or mentor and expect to win with no losing periods.
Computers are more powerful today than the one that Mission Control used to land man on the moon – yet the ratio of traders that lose remains the same – 95%
Don’t be fooled – the key to forex trading success is not the system but the trader and his attitude; discipline is the key just as it has been since trading began.
If you build it yourself or follow someone else you MUST know how and why it works or you will never acquire confidence in your trading system. If only trading were that simple.
No trading success and discipline comes from within from understanding flows confidence and from confidence flows discipline.
If you are not prepared to learn forex trading and get the right forex education don’t bother do something else as you will lose.
The Good News Is:
Anyone has the potential to learn how to trade and acquire discipline but you must do your homework and understand no one else can give you confidence and discipline it comes from within.