Forex Review - Trading

1. What is Forex market trading? Well, a simple Forex review will state that it is an electronic market, with transactions taking place via the internet or telephone, which deals in currency trade with no fixed exchange. Once the bastion of large financial institutions, more and more individuals are now benefiting from Forex tips and trading in this over-the-counter market.
2. Using the currency pairing of EUR/USD (Euro's over US dollars) as an example, it is important to understand that these currencies are always dealt with in partnerships. The Euro's in this example is known at the base currency, whilst the US dollars are the counter currency.
3. So what does this mean in terms for the Forex market trade? Well, looking at the pairing, it is the amount of counter currency which is required to purchase one unit of the base currency.
   So, again in this example if you were to buy this pair, the deal would be broken down as you purchasing the Euro's whilst concurrently selling the US Dollars. Alternatively, were you to sell this pair, you would be selling the Euro's and acquiring the US Dollars.
4. A simple Forex tip is to think of the pair of currencies, whichever are being used, as one single item and not as separate entities. So, if the market suggests that the Euro will strengthen against the US Dollar, you buy the EUR/USD pair. If, by reading Forex signals, it looks as if the reverse will happen and the Euro will weaken, then you would sell that very same pair.
5. Looking at the trade in actual numbers, which can be done via Forex trading software, you will see two numbers. For example, staying with the Euro's over US Dollars Forex demo, you may see 1.3461/1.3466. The first number will be the price of the bid, the price at which traders on the Forex market will be prepared to purchase Euro's against the US Dollar. The second number would be the offer price, meaning for those who are fixed to sell the Euro against the US Dollar, that is the price they would receive.
6. The balance between the two prices, the bid and the offer is known as the spread. A new trader looking at a Forex review will learn that the spread between two currencies is normally ranging between 3 to 5 pips. What are pips? Pips are a Forex coined-term relating to the most common increment in currencies. For example, if the Euro's above increased from 1.3461 to 1.3462 then that adjustment on the last decimal place of the number (with four decimal points being quoted on most currencies), would be known as a single pip.
7. A forex review [http://legitimate-high-yield-investment.com/forex-review-trading-demystified] of traditional trading methods, shows that deals are done via lots, which can also specified as being contracts. A fairly recent new introduction to the Forex market trading has been the mini lot, which has a size of $10,000, and has become a popular alternative to the standard sized lot which is $100,000.
8. For the new trader, $300 would secure a mini account with most Forex brokers, who typically offer 1% margins. So when trading a mini lot, you would need a margin of $100, which is then the controlling factor of the $10,000 mini lot. What does that mean in terms of making money? Well, if you traded your $10,000 mini lot and the currency increased by 1% then your profits would be $100. In other words, you would match 100% of your original margin.
9. The options for day trading on the Forex market can prove to be very profitable. With the typical need of controlling a standard sized lot requiring at least $2,500 to open the account, a Forex tip is to instead, as a Forex newcomer, trade with just the mini account for a length of time. Once trading of your first mini lot has accrued $100 profit for example, then you can start moving upwards and trading with two, gaining valuable Forex tips and experience to start trading with standard lots.
10. With an estimated daily turnover of nearly 2 trillion dollars, a figure which actually exceeds all of the world's stock markets, Forex has established itself as the largest financial trade market in the world.
11. Forex trading offers a lucrative market, tendering a little safer practice than other markets due to smaller trading amounts and therefore risks run a lot shorter than some other financial products.
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