What is Forex Trading

what is forex signals

What is Forex Trading

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What is Forex Trading – the question thousands are asking daily. Daily FX Signals by FXPremiere Group talks on the
The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD.  If the exchange rate rises, you will sell the Euros back, making a profit. Please keep in mind that fx trading involves a high risk of loss always.

DIFFERENT TYPES OF FOREX CHARTS

what-is-forex-trading What is Forex Trading

Why Trade Currencies?

Forex is the world’s largest market, with about 6.1 trillion US dollars in daily volume and 24-hour market action. Some key differences between Forex and Equities markets are:

  1. Many firms don’t charge commissions – you pay only the bid/ask spreads.
  2. 24 hour trading – you dictate when to trade and how to trade.
  3. Trade on leverage, but this can magnify potential gains plus losses.
  4. Focus on picking from a few currencies rather than from 5000 stocks.
  5. Forex is accessible – you don’t need a lot of money to get started like $50.

Why Currency Trading Is Not For Everyone

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for everyone. Remember, you could sustain a loss of some or all of your initial investment, which means that you should not invest money that you cannot afford to lose. Always consult a financial advisor before proceeding. ( FxPremiere Group are not financial advisors ).

what-is-forex-signals What is Forex Trading

What is Forex?

You may have noticed that the value of currencies goes up and down every day. What most people don’t realize is that there is a foreign exchange market – or ‘FX’ for short – where you can potentially profit from the movement of these currency pairs. The best known example is Sir George Soros who made a billion dollars in a day by trading currencies from the spread differences. Be cautious, however, that currency trading involves significant risk and individuals can lose a substantial part of their investment.

Forex in a nutshell

The Forex market is the largest financial market on the planet. Its average daily trading volume is more than $6.1 trillion. Compare that with the New York Stock Exchange, which only has an average daily trading volume of $52 billion. In fact, if you were to put ALL of the world’s equity and futures markets together, their combined trading volume would only equal only a fraction of the Forex trading market. Why is size important? Because there are so many buyers and sellers that transaction prices are kept low. All about supply and demand – What is Forex Trading

  1. Many firms don’t charge commissions – you pay only the bid/ask spreads.
  2. 24 hour trading – you dictate when to trade and how to trade.
  3. Trade on leverage, but this can magnify potential gains and losses.
  4. You can focus on picking from a few currencies rather than from 5000 stocks.
  5. High Risk reward – Ratio.

Forex explained

The aim of forex trading is easy. Just like any other form of high risk speculation, you want to buy a currency at one price and sell it at higher price (or sell a currency at one price and buy it at a lower price) in order to make a marginal profit. For instance, the price of one British pound could be measured as, say, two US dollars, if the exchange rate between GBP and USD is 2 exactly. In forex trading terms this value for the British pound would be represented as a price of 3.1111 for the forex pair GBP/USD. Currencies are grouped into pairs to show the exchange rate between the two currencies; in other words, the price of the first currency in the second currency. spread may be wider.

what-is-forex-signals-trading-metatrader-platform What is Forex Trading

Forex trading spread

Like any other trading price, the spread for a forex pair consists of a bid price at which you can sell and an offer price at which you can buy.It is important to note, however, for each forex pair, which way round you are trading. When buying, the spread always reflects the price for buying the first currency of the forex pair with the second. So an offer price of 1.3111 for EUR/USD means that it will cost you $1.310 to buy €1.11. You would buy if you think that the price of the euro against the dollar is going to rise, that is, if you think you will later be able to sell your €1.11 for more than $1.31. When selling, the spread gives you the price for selling the first currency for the second. So a bid price of 1.3000 for EUR/USD means that you can sell €1.11 for $1.31. You would sell if you think that the price of the euro is going to fall against the dollar, so you can buy back your €1.11 for less than the $1.31 you originally paid for it. See best times to trade forex signals- What is Forex Trading.

Calculating your profit

Take another example. Suppose the spread for EUR/GBP is 0.8412-0.8416. If you think the price of the euro is going to rise against the pound you would buy euros at the offer price of 0.8415 per euro. Say in this case you buy EUROS 10,000 at a cost to you of £8412. The spread for EUR/GBP rises to 0.8532-0.8533 and you decide to sell your euros back into pounds at the bid price of 0.8532. The EUROS 10,000 you previously bought is now therefore sold for £8532. Your profit on this transaction is £8532 minus the original cost of buying the euros (£8415) which is £117. Note that your profit is always determined in the second currency of the forex pair or forex trading strategy. Alternatively, suppose in the first instance you think the price of the euro is going to fall, and you decide to sell EUROS 10,000 at the original bid price of 0.8414, for £8414. In this case you are right and the spread for EUR/GBP falls to 0.8312-0.8313. You decide to buy back your EUROS 10,000 at the offer price of 0.8313, a cost of £8313. The cost of buying back the euros is £111 less than you originally sold the euros for, so this is your profit on the transaction. Again your profit is determined in the second currency of the forex pair.

profit-and-loss What is Forex Trading

“ForexSignals” i mean ”Forex” stands for Foreign Exchange, and refers to the buying or selling of one currency for another. It’s the most heavily traded market in the world. When you go on a trip and convert your US dollars for euros, you’re participating in the global foreign exchange market. How much demand there is for a currency will either push it up or down in value relative to other currencies – What is Forex Trading.

  • In the Forex Currency market, many use live forex signals whilst trading. Currencies always trade in pairsWhen you exchange US dollars for euros, there are two currencies involved. For every foreign exchange transaction, you must exchange one currency for another. This is why the forex market uses currency pairs, so you can see the cost of one currency relative to another. The EUR/USD price, lets you know how many (USD) it takes to buy (EUR).
  • The Forex market uses symbols for currencies. The euro is symbolized by EUR, the US dollar is the USD. Other currency symbols are: Australian dollar=AUD, British pound=GBP, Swiss franc=CHF, Canadian dollar=CAD, New Zealand dollar=NZD and Japanese yen=JPY.
  • Each forex pair, EUR/USD, AUD/USD, USD/JPY for example, will have  a market price on how to trade forex associated with it. The price refers to how much of the second currency it takes to buy one unit of the first currency. If the price of the EUR/USD is 1.3637 it costs 1.3637 US dollars to buy one euro.
How-does-currency-trading-actually-work-fxpremiere-1 What is Forex Trading

What is the forex trading? FxPremiere Group

  • MAJOR PAIRS

    Major pairs are the most traded, and account for nearly 90% of trade volume on the forex market also known as the most traded currency pairs.
    These currency pairs could typically have low volatility with high liquidity.
    They are associated with stable, well managed economies.

  • CROSSES

    Cross currency pairs – Crosses – are pairs that do not include the DOLLAR – USD.
    Crosses were converted first into USD and then into the desired currency. But are now offered for direct exchange. The most commonly traded are derived from Minor currency pairs (eg. EUR/GBP, EUR/JPY, GBP/JPY); they are typically less liquid and more volatile than Major currency pairs.

  • EXOTIC PAIRS

    Exotics are currencies from emerging or smaller economies, paired with a Major. | What is Forex Trading.
    Compared to Crosses and Majors, Exotics are much riskier to trade because they are less liquid, more volatile, and more susceptible to manipulation. They also contain wider spreads, and are more sensitive to sudden shifts in political and financial developments.

27 What is Forex Trading

Forex Trading Alerts Daily

If you want to find out how many euros it costs to buy one U.S. dollar we need to flip the pair to USD/EUR. To find out this rate, divide 1 by 1.3635 (or whatever the current rate is). The result is 0.7334. It costs 0.7334 euros to buy one USD based on the current price. The price of the currency pair constantly fluctuates, as transactions occur around the globe, 24-hours a day during the week.

Forex Day Trading

Starting with $500 gives some flexibility in how you can trade; $100 doesn’t. If you want to day trade forex, start with at least $500. No matter what balance you start with, limit risk to 1-2% of your account balance on each trade. Alter the above scenarios to help determine what your position size should be based on the stop loss level you use and what type of lot (micro, mini or standard) you’re trading.

The amount of starting capital will also affect the income (in dollars). If looking to get an income from trading, then it is better to save up more capital than to try to start with a smaller amount that leaves you disappointed with the income produced and doesn’t compensate you for the time you are putting in.

Know the Risks

Trading Signals foreign exchange on margin carries a high level of risk, and may not be suitable for everyone. Before deciding to trade foreign exchange you should carefully consider your investment objectives.

Understanding Currency Pairs

All transactions made on the forex market involve the simultaneous purchasing and selling of two currencies.
These are called ‘currency pairs.

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