In the currency market, buying or selling of currencies. Placing a trade in the foreign exchange market is simple: the technical aspects of a trade are much more similar to those found in other markets (like the stock market), so if you have any experience in negotiation, must be able pick up fairly quickly.
The purpose of Exchange is to exchange one currency for another, hoping that the price will change the currency you bought increases in value compared to what you sell.
How to Read Forex Quote
Currencies are always traded in pairs like the EUR / USD or USD / CHF. The reason is quoted in pairs, as each currency transaction is the simultaneous buying of one currency and selling another. Here is an example of an exchange rate of sterling against the U.S. dollar:
GBP / USD = 1.7500
the currency to the left of the slash ("/") is called the base currency (in this example, the pound sterling) and the right is called the coin or currency trading (in this example, the U.S. dollar).
When buying, the exchange rate indicates how much you pay in the budget of the unit of currency to buy one unit of base currency. In the above example, you have to pay U.S. $ 1.7500to buy 1 British pound.
When selling, the exchange rate tells you how many units of currency trading are obtained through the sale of one of the base currency. In the example above, you will receive U.S. $1.7500to sell 1 British pound.
The base currency is the "basis" for the purchase or sale. If you buy EUR / USD this basically means you are buying the base currency and simultaneously selling the quote currency.
You should buy the pair if you believe the base currency can be seen in connection with foreign exchange trading. You must sell the pair if you think the base currency will depreciate the currency in relation to the account.
Long / short
first, it must determine whether to buy or sell.
If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then sold again at a higher price. The operator of expression, this is called "going long" or taking a "long" position. Just keep in mind: long = buy.
If you want to sell (which actually means sell the base currency and buying the quote currency), you want the base currency to fall in value and then buy back at a lower price. It is recognized as "going short" or taking a "short point" Short = sell.
Bid / Ask Spread
All Forex quotes include a two-way price, supply and demand. The bid is always lower than the selling price.
The offer is the price at which the trader is willing to buy the base currency in exchange for currency trading. This means the bid is the price at which the operator will sell.
The problem is the price at which the dealer will sell the base currency in exchange for the quote currency. This means that the problem is the price at which the trader will buy.
The difference between the offer and sale price is popularly known as the spread.
An example of commercial software:
In the EUR / USD quote, the bid price is 1.2293 and the selling price is 1.2296. See how this agent makes it so easy for you to trade away their money. If you sell Euros. Click "sell" and to be sold at € 1.2293. If you want to buy Euros, click "Buy" and you are buying € 1.2296.
In the following examples, I use fundamental analysis to help us decide whether to buy or sell a specific currency pair. If you always fell asleep during your economics class or just out of economic class, do not worry, we will cover fundamental analysis in a later lesson. For now, try to pretend he knows what is happening.
EUR / USD
In this example euro are the base currency and thus the "basis" for the buy / sell.
Considering the U.S. economy continues to weaken, which is bad for the U.S. dollar, you could do a BUY EUR / USD order. In doing so, you have bought euro’s in the expectation that they will rise versus the U.S. dollar. If you believe the U.S. economy is strong and the euro weakened against the U.S. dollar ended you would trade EUR / USD. When you have sold euros in the expectation that they will fall versus the U.S. dollar.
USD / JPY
In this example, the U.S. dollar is the base currency and thus the “basis” for the buy / sells.
If you think the Japanese government is going to weaken the yen in order to help its export industry, you would execute a BUY USD / JPY. In doing so, you have bought U.S. dollars in the expectation that they will rise against the Japanese yen. If you believe that Japanese investors are taking money out of U.S. financial markets and the conversion of every dollar back to Yen, and this will hurt the U.S. dollar would conduct a sale of USD / JPY. In doing so, has sold U.S. hopes dollars in that they will depreciate against the Japanese yen.
GBP / USD
In this example euro are the base currency and thus the "basis" for sale.
If you think that the British economy will continue to do better than the U.S. in terms of growth, you would execute a BUY GBP / USD order. In doing so, you have bought pounds in the expectation that they will rise versus the U.S. dollar. If you believe that the British economy is slowing, while the U.S. economy remains vibrant, you would execute a SELL GBP / USD order. In doing so pounds, which have been sold at the prospect of a decline in value against the U.S. dollar.
USD / CHF
In this example, the USD is the base currency and thus the "basis" for the purchase and sale.
If you think the Swiss franc is overvalued, you should make a purchase of USD / CHF. In doing so, you have bought U.S. dollars with the hope that they will appreciate versus the Swiss franc. If you believe that because of the instability in Iraq and U.S. financial markets the dollar will weaken, you would execute a sell USD / CHF. By doing so you have sold U.S. dollars in the hope that they will depreciate against the Swiss franc.
I do not have enough money to buy $ 10,000 EUR. Can I still trade?
You can trade the tip! Margin trading is basically a term used for trading with borrowed capital. That’s how you're able to open $ 10,000 or $ 100,000 positions with $ 50 or $ 1,000. You can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital.
Business Edge in the foreign exchange market is quantified in lots. Just think of the word "lot" as the minimum amount of coins you have to buy. When you go to the supermarket and buy an egg, can not only buy a single egg, come in dozens or "lots" of 12. In Forex, it would be foolish to buy or sell $ 1 EUR, usually come in "lots" of $ 10,000 or $ 100,000 depending on the type of account you have.
For example:
You believe that a signal in the market indicates that the pound sterling against the U.S. dollar increase. Open 1 lot ($ 100,000) for the purchase of a pound, with a margin of 1% in the price of 1.5000 and wait for rising rates. This means that now control $ 100,000 worth of British Pound with $ 1,000. His predictions come true and you decide to sell. Closes 1.5050 situation .You earn 50 pips or about $ 500. (A pip is the smallest price movement available in a coin). Thus, for an initial capital investment of $ 1,000, it has an efficiency of 50%. Back profit equals $ 500 divided by that risked $ 1,000 to trade.
Its stock of your money GBP USD
to buy 100,000 pounds at the exchange rate of 1.5000 USD GBP 100,000 -150,000 $ 1.000
Blink for two seconds and the GBP / USD exchange rate rises from 1.5050 and to sell. -100,000 150,500 ** $ 1,500
you have earned a profit of $ 500. 0 +500
deciding to close a position, the deposit is returned and originally calculating profits or losses is done. This gain or loss is then credited to your account.
We will also discuss more leeway in depth at the next lesson, but I hope you can get a basic idea of how the margin.
Rollover
No, this is not the same as rollover minutes from your cell phone company. For positions open at 5pm EST, there is a daily interest rate or overturning of a seller pays or earns, depending on your established margin and position in the market. If you will not earn or pay interest on your positions, simply make sure it is closed at 5pm EST, to set the market day.
Since every currency trade involves borrowing one currency to buy another, interest rates rollover is an inherent part of FX trading. Interest is paid in the currency that is borrowed, and won in that purchase. If a customer is buying a currency with an interest rate that he / she is borrowing, the net differential will be USD positive (i.e. / JPY) - and you will receive the funds as a result. Consult your adviser details overturned.
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