Currency Trading Basics

Forex Currency Trading Basics: Are you a bull or bear


Forex currency trading is booming worldwide and is fast becoming the choice of many online and offline investors, but what is Forex and how it can be included in this attractive new investment arena.

First of all lets explain what Forex truly stands for and what it involves.

Forex stands for foreign exchange and trade of one currency value at a given time in relation to another currency value, so we traded money market or cash.

The Forex market is also known as a bull market or spot market.

Similar to trading stocks where you buy a particular stock at a given price, then the value of the shares increase in value, so you can realize a profit on your investment, traders in the Forex buy and sell units of currency.

The unit of currency that you intend to trade in is called "a lot" and is equivalent to $ 10,000 in mini traders account and $ 100,000 in standard or 100k account.

When trading currencies you are required to open an account with a Forex broker and make an initial deposit into what is called a margin account, this is because you actually do not pay immediately the full cash value of its currency, but does not deal with the use of leverage the multiplication of money you invest.

Movement of currency value is measured in units called pips, for example, if the value of the British pound against the dollar was 1.8720 and moved to the Forex market value of 1.8721 will be a PIP motion.

A mini traders account usually works to the advantage of 10-1, while the standard traders account works on leverage of 100 to 1, meaning that a mini traders account for each PIP move a lot or your currency up or down or will be making the 1 $ gain or loss of $ 1 off your account.

The standard account of this same movement PIP will make a profit or $ 10 or $ 10 loss.

Mini traders account is ideally suited for new or novice traders who want to try the Forex market and see if their investment potential is suitable for them.

An interesting aspect of the Forex market is that not only can you buy a lot of currency expected to increase in value, but you can also sell the very first currency with the belief that you can fall in value, as you can then buy the equivalent to close the trade and make profit.

It should be understood that dealing with the Forex market is a strategy for investment and markets can move violently in either direction, this gives an opportunity to make money, but the reverse should be aware that you could lose money without proper forex trading education and preparation of strict and reasonable strategy.