My OperaCurrency Trading Basics For Those Who Have An Interest In Currency Trading
Saturday, August 7, 2010 3:08:05 PM
A lot of investors and or traders from all over the globe are turning their interests to the currency trade market as being a new opportunity to make money. So how is this conducted and what are the currency trading basics for what is otherwise known as the Forex Market?
If you are wanting to jump right in and take a ride on this trade market it would be a good idea to make sure that you read these basics and maybe even do a little more of your own research or talk to a broker, before you start investing in this.
So what exactly is this kind of trading? What is traded in this type of market by the stock traders and investors would be different pairs of money. This is the exchange rate between two different types of currency made. The most common pairs you will see on the market would be EUR and USD, this is the Euro and U. S. Dollar, there is the GBP and USD which of course is the English pound and the U. S. Dollar, then there is the USD and CAD which is the Canadian dollar and U. S. Dollar, the USD and JPY is the U. S. Dollar and Yen, USD and CHF is the U. S. Dollar and the Swiss franc and then there is the USD and AUD which is the Aussie and U. S. Dollar.
In the Forex Market these currency pairs can actually make up 85 percent of the total value of this market. Investors and traders can do two different things here, they can go long which is for example if they take the Euro and buy it, they will at the same time sell the USD. If they go short this would be for example selling the AUD and buying the USD.
The first money listed of the different pairs is considered to be the base currency and the second money listed is called the counter or the quote currency. Each of the pairs is listed in units or the quote currency that is needed to get just one unit of the currency called the base. So if the price of the EUR and USD is say 1.5432 it would mean that you would need 1.5432 U. S. Dollars to earn one EUR.
Another helpful thing to note regarding currency trade basics is the pip. This is the special interest and price points. It is the smallest amount that any currency pair can make . For example if your USD and AUD move was 1.5000 to 1.5015 this would make for 15 pips. Should your USD and CAD move is 115.00 to 116.00 would equal 100 pips.
Generally the majority of markets will require that you make a full deposit for any trade. With currency trading however; it is quite different because you only need to make a marginal deposit. This is what is considered to margin trading or leverage. You simply put up just a small percentage of the trade. If your broker offers a 400 to 1 deposit this would mean you put up just 25 percent. The average broker usually offers 100 to 1 which is a 1 percent deposit.
You need to be aware of what is called a margin call. This is when a balance of a trade account falls below the actual maintenance margin. When a broker notices this, he or she will try to get rid your current trades by selling them if what you did were long trades. The broker will try to get back all of your trades if they were done as short trades. When this happens it usually means there was some kind of money mishandled or mismanaged.
In order to manage your Forex, Day Trader Software is a must. There is a 4X Currency Trading you can use in order to read what others are talking about.Auto Forex Trading Software: Auto Forex Trading Software
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