Learn Online Forex Trading – by FxPremiere Group Free Forex Learning Guides Online.
Currency pairs and rates
Their names are given as a three letter abbreviation known as ISO code, where the first two letters represent the country and the third one is the name of the currency. open a forex account.
The most traded ones are usually referred as to majors and include the US dollar, the euro, the Great Britain pound, the Japanese yen, the Canadian dollar, the Swiss franc, the Australian dollar and the New Zealand dollar. Major pairs involve the US dollar and another currency from the list above, for example, EURUSD, USDJPY, USDCHF
Cross pairs comprise of two major currencies neither of which is the USD dollar, for example EURGBP, EURCHF, EURJPY, GBPCAD, GBPAUD and CHFJPY.
Exotic pairs consist of a major currency and another less traded one, for instance EURTRY, USDSEK, USDDKK, USDHDK, USDSDG. Exotics tend to be less liquid and to have less tight spreads.
Closing order is always opposite to the opening one, that is, by closing a long (buy) position you sell the amount back and vise versa – when you close a short (sell) position, you buy the amount you previously sold. Forex Signals Margin and Leverage
Stop loss is intended to limit the losses and is set above the open price for short positions and below the open price for long positions. Take profit allows you to close a position when a certain profit is gained. Take profit level is below current Ask price for a short position and above current Bid price for a long position.
In order to gain profit you need to close long positions when the price goes up and close short position when the price goes down.
Leverage, volume, required margin
To open a position you need to have a certain amount in your balance, which is commonly referred as to required margin or just margin. The amount depends on the trading tool, volume and leverage. Learn Forex Online
- Trading tool is basically anything you can trade with, including currency pairs, spot metals, oil or indices.
- Volume is the amount you buy or sell measured in lots. 1 standard lot equals 100 000 units of the base currency. Depending on your balance and account type you can also trade mini lots (0.1) and micro lots (0.01). Volume defines the pip price, that is, the higher your volume is, the more significant each price movement will be. For example, pip price for EURUSD 1 lot is 10 USD, for EURUSD 0.5 lot is 5 USD. You can use this tool to calculate pip price for any position see more on leveraged forex trading.
- Leverage is a virtual credit provided by the company. The higher your leverage is, the lower marginal requirements will be. For example, when you use no leverage (ratio 1:1), you will need 100 000 EUR to open 1 lot of EURUSD; if your account leverage is 1:200, only 500 EUR will be required. The maximum leverage our offers is 1:500, that is, you will need only 200 EUR to open 1 lot. beware of Arbitrage Forex.