Currency Trading Basics That a Beginner Should Know
Currency trading is one of the largest financial markets in the world but one that is understood by very few people. What is shocking is that, even some traders who make some money from engaging in the trade engage in the trade through representatives still understand very little about currency trading. A large number of people still require some training on the currency trading basics. Most people still think currency trading is a preserve for the big multinationals. A Forex trading course can help such people gain better understanding.
What is traded?
Before you go deep into Forex trading you have to understand currency trading basics. Basically speaking Forex trade involves trading in currency pairs. The currency pair is the exchange rate of one currency over another. There are some pairs that are commonly traded and others that are traded rarely. The pairs work in that if for instance a trader buys the Euro using a US dollar, the trader is buying the Euro and at the same time selling the US dollar. If a trader goes ahead and sells the Japanese yen, he or she is selling the Yen and at the same time buying the US dollar. Forex trade too has its own language, best learnt by taking a Forex trading course.
The bid- ask spread
This is another common term that every trader ought to be taught in the currency trading basics. It would be important for any beginner in the Forex trading to note that all currency pairs on the Forex market are quoted with a bid and an ask price. The bid price is the price one is willing to buy the currency at. This too is a term one learns in a Forex trading course. The price is normally lower than the trader is willing to sell. The ask on the other hand is the price at which the seller is willing to sell his currency. This too is normally quoted at a price that is higher than the buyer is willing to pay.
How Forex market differs from other markets?
Another of the currency trade basics that every new entrant into the market ought to understand is the difference between Forex market and other types of markets. The most visible difference that every newcomer should note is that unlike stock market, currency trade does not take place on a regulated exchange. Most of the systems that exist to regulate the stock market are absent in currency trading. You can learn the systems in a Forex trading course. It's not controlled by central government and there are no clearing houses like there are in the stock market. The market runs on self regulation.
What is sold?
One thing that really baffles those learning currency trading basics is the fact that currency trading does not involve any physical exchange of cash. A Forex trading course can explain to you how exactly the process goes on. It is purely a speculative kind where we can say traders sell "nothing." All trade is in form of computer entries. Basically speaking, currency trading exists to help those multinationals that must continually change currency so as to engage in international trade.
What is traded?
Before you go deep into Forex trading you have to understand currency trading basics. Basically speaking Forex trade involves trading in currency pairs. The currency pair is the exchange rate of one currency over another. There are some pairs that are commonly traded and others that are traded rarely. The pairs work in that if for instance a trader buys the Euro using a US dollar, the trader is buying the Euro and at the same time selling the US dollar. If a trader goes ahead and sells the Japanese yen, he or she is selling the Yen and at the same time buying the US dollar. Forex trade too has its own language, best learnt by taking a Forex trading course.
The bid- ask spread
This is another common term that every trader ought to be taught in the currency trading basics. It would be important for any beginner in the Forex trading to note that all currency pairs on the Forex market are quoted with a bid and an ask price. The bid price is the price one is willing to buy the currency at. This too is a term one learns in a Forex trading course. The price is normally lower than the trader is willing to sell. The ask on the other hand is the price at which the seller is willing to sell his currency. This too is normally quoted at a price that is higher than the buyer is willing to pay.
How Forex market differs from other markets?
Another of the currency trade basics that every new entrant into the market ought to understand is the difference between Forex market and other types of markets. The most visible difference that every newcomer should note is that unlike stock market, currency trade does not take place on a regulated exchange. Most of the systems that exist to regulate the stock market are absent in currency trading. You can learn the systems in a Forex trading course. It's not controlled by central government and there are no clearing houses like there are in the stock market. The market runs on self regulation.
What is sold?
One thing that really baffles those learning currency trading basics is the fact that currency trading does not involve any physical exchange of cash. A Forex trading course can explain to you how exactly the process goes on. It is purely a speculative kind where we can say traders sell "nothing." All trade is in form of computer entries. Basically speaking, currency trading exists to help those multinationals that must continually change currency so as to engage in international trade.
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