Now that you know the purpose of forex trading the next step in knowing all about forex is to understand the codes, definitions and numbers used when trading. All currencies used in forex trading are assigned a three letter code. An example of this is the US dollar which is USD or the Euro EUR. Online currency trading is done in combinations that are known as a cross and these are represented by 6 letter words with the more expensive currency coming first. An example of this is GBPUSD which will show you how many US Dollar you will need to pay for one British pound. These rates are shown as five digit numbers for example GPBUSD = 1.6262 which means that 1 British pound is worth 1.6262 US dollars. When the rate changes the change will be displayed in bold, eg GPBUSD = 1.6264 which will mean that the rate has moved by 2 points. Knowing this is the key to successful forex trading and your key to profit.
When you enter the forex trading market you will enter as a buyer or a seller of a particular currency. If you are a seller you price is known as the ASK price and the buyers price is known as the BID. You can only buy currency from a seller with an asking price the same as the BID price.
These are the main beginner’s points to note when it comes to forex trading and knowing what the purpose of trading forex is and knowing all about forex before you enter into the market can make a big difference when it comes to your profits.
How to make money online with forex
The largest financial trading market in the world. Open 24 hours a day, seven days a week. Two trillion dollars on the line every day. And it’s all trade accessible from your personal computer.
Foreign exchange trading, often referred to as Forex trading, is potentially the key to monetary success in an open market. By trading foreign currency on an inter-bank, inter-dealer market, traders simply make money buying and selling any number of worldwide monies. But Forex training is essential to successful Forex trading. It’s a simple equation with enormous implications toward success or failure in the market.
A fast-paced industry with sudden, unexpected changes happening every day, multiple times a day, this market is forever moving. With no centralized market location, forex markets are traded mostly over computer terminals around the world. A literal 24/7 market, trading begins in Sydney and opens around the globe as the day rolls on. First in Tokyo, then London and onto New York.
Truly unique as a financial market, traders get to experience the ups and downs of the economy based on real-time current events. From economic fluctuations in Tokyo to a natural disaster in Europe or the election of a new U.S. President, Forex traders feel the fluctuations. Essentially, the value of a country’s economy or monetary power is mirrored in its financial situation. Trading on the Forex is like trading other countries based on their value.
Therefore, forex training is the key to success on this ever-changing worldwide market. Knowledge, training and a broad understanding of the basics and history of this institution is invaluable.
Foreign exchange is traded in currency pairs and involves the simultaneous buying of one currency and selling of another. More than 85 percent of all the daily transactions totaling $2 trillion dollars revolve around trading seven major currencies: U.S. Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Australian Dollar and Canadian Dollar. Trading these pairs allows for the best opportunities for financial success due to the incredible, nearly perfect liquidity of this market.
In recent years, technology and proper forex training has allowed for the Forex to transform into a trading revolution for the personal investor. In the past, only large investors and corporations could set foot in the market. Today, market makers and market participants and clients join together to make this interbank market a reality. The result: an efficient, low-price way to trade on a worldwide market.
Forex training must include a thorough understanding of how the trade process works. Essentially, there are two types of accounts: standard and mini. In a standard account, 1 contract controls $100,000 of currency with a margin requirement of $1000. A mini account controls $10,000 worth of currency with a $50 margin requirement. Therefore, the standard account has a leverage of 100:1, while the mini is at 200:1.
The minimum price increment measured is called a “pip,” also known as a point. When comparing currency pairs, investors buy their base currency against another. For example, if an investor purchased the U.S. Dollar against the Euro at 1.2500 and the price increased, the amount of pips would increase by the ratio of the standard or mini account.
Major advantages to trading the market with essential Forex training include free real-time quotes and charts, no exchange fees, 24-hour liquidity and no price discrepancy between the one desired and the actual price on fills.
Trading the forex is an opportunity with great potential for monetary success if the knowledge gained is fully understood and implemented.
Forex Training: What To Look For In A Forex Training Program
Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don’t get me wrong here, taking a Forex training program or a Forex trading course won’t guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.
Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many training programs available, but not every one of them suits the needs of every trader.
The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most courses or training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won’t help the trader to make consistent results.
The following subjects are what I consider the most important aspects of trading and every training program or trading course should address:
Forex trading basics.
Review basic concepts such as: margin, type of orders, a little background, bid/ask, rollover, etc. You need to make sure you understand every single concept to perfection.
Main drawbacks of Forex traders.
Being aware of the common mistakes made by Forex traders and knowing how to handle them will prevent new traders from making those mistakes.
Technical and fundamental analysis.
These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor.
The three pillars of Forex trading. I consider that these three subjects have the most impact on every trader trading account.
Forex trading system development.
Having the right system is a must if you want to have consistent profitable results. Having a system that doesn’t fit you will cause a series of problems that will make your trading account vanish away (second guessing the system, not following your system, etc.)
Money management.
This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)
Trading psychology.
Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.
Other important aspects every training program should include are:
Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.
Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the training program works.
A good course will have the following:
A live conference room, where you can apply everything learned under live market conditions.
One-on-one feedback, every trader has different needs and requires special attention. For instance a trader wanting to improve the system and requires individual feedback from the instructor about it.
Online trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don’t have to change your lifestyle.
A forum, where members can talk just about everything related to the Forex market and the Forex training program.
Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader’s trading career.
