Hello and welcome to the Forex 101 Classroom.
So, you wanna make some money through Forex trading? Before you read further, let us warn you that 7 out of 10 traders keep losing money in the Forex market; while the rest of the 30% work freely from their home and earn millions annually.
What makes the difference between the two types of trader? Well, the top 30% are those with Forex skills and knowledge.
It is no secret that the foreign currency exchange (FOREX) market is a market full of obstacles, so much so infact that you can lose your hard-earned money in a fraction of second. So, If you want to make money in Forex trading, you'll need to educate yourself well enough to succeed.
The Forex market is definitely not a game for a newbie and you need to brush up your skills before getting your hands wet.
Forex is a very unique market.
Forex is actually the short form of the word Foreign Exchange. It refers to the simultaneous buying and selling of a currency pair. In Forex, currencies are always traded against one another and quoted in pairs. For example, USD/JPY refers to the US dollars and Japanese Yen pair. Some of the major currencies being traded on the Forex market are Swiss Franc (CHF), Euro (EUR), British Pound (GBP) and the Japanese Yen (JPY). All these currencies are traded against the US dollar (USD).
All currencies are traded in pairs. Within the pair itself, the first currency is known as the base currency while the second currency is known as the quote or counter currency. All quotes for Forex are quoted in terms of the base currency. When you ask for a currency quote, you will be given two prices, the bid price and the ask price. The Bid price is the price that you will get for selling a currency while the Ask price is the price that you will get for buying a currency. Both these prices are expressed in terms of the base currency. Let us say that the exchange rate for the USD/CHF currency pair is 1.6550. This means that one dollar is equivalent to 1.6550 Swiss francs.
As mentioned earlier, all currency quotes have two prices. For example if you requested a quote for EUR/USD, you will be given a quote like EUR/USD 1.4550/55. The price on the left side of the quote is the Bid price (1.4550) while the price on the right side is the Ask Price (1.4555). In Forex, any fluctuation of the rates is referred to by how many “pips”. A pip is actually the smallest movement a currency quote can have. For example, if the EUR/USD Bid price moves to 1.4553, this means the rate had move by 3 pips from 1.4550. In this case, depending on the account type that you are trading with, a pip can worth $1 (for a mini account) or $10 (for a 100K account).
Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.
So, you wanna make some money through Forex trading? Before you read further, let us warn you that 7 out of 10 traders keep losing money in the Forex market; while the rest of the 30% work freely from their home and earn millions annually.
What makes the difference between the two types of trader? Well, the top 30% are those with Forex skills and knowledge.
It is no secret that the foreign currency exchange (FOREX) market is a market full of obstacles, so much so infact that you can lose your hard-earned money in a fraction of second. So, If you want to make money in Forex trading, you'll need to educate yourself well enough to succeed.
The Forex market is definitely not a game for a newbie and you need to brush up your skills before getting your hands wet.
A very brief intro on Forex trading
Foreign currency exchange (Forex) market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily. The figure is nearly 30 times larger than the total volume of equity trades in United States.Forex is a very unique market.
Forex is actually the short form of the word Foreign Exchange. It refers to the simultaneous buying and selling of a currency pair. In Forex, currencies are always traded against one another and quoted in pairs. For example, USD/JPY refers to the US dollars and Japanese Yen pair. Some of the major currencies being traded on the Forex market are Swiss Franc (CHF), Euro (EUR), British Pound (GBP) and the Japanese Yen (JPY). All these currencies are traded against the US dollar (USD).
All currencies are traded in pairs. Within the pair itself, the first currency is known as the base currency while the second currency is known as the quote or counter currency. All quotes for Forex are quoted in terms of the base currency. When you ask for a currency quote, you will be given two prices, the bid price and the ask price. The Bid price is the price that you will get for selling a currency while the Ask price is the price that you will get for buying a currency. Both these prices are expressed in terms of the base currency. Let us say that the exchange rate for the USD/CHF currency pair is 1.6550. This means that one dollar is equivalent to 1.6550 Swiss francs.
As mentioned earlier, all currency quotes have two prices. For example if you requested a quote for EUR/USD, you will be given a quote like EUR/USD 1.4550/55. The price on the left side of the quote is the Bid price (1.4550) while the price on the right side is the Ask Price (1.4555). In Forex, any fluctuation of the rates is referred to by how many “pips”. A pip is actually the smallest movement a currency quote can have. For example, if the EUR/USD Bid price moves to 1.4553, this means the rate had move by 3 pips from 1.4550. In this case, depending on the account type that you are trading with, a pip can worth $1 (for a mini account) or $10 (for a 100K account).
Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.
