Learn How To Trade Forex And How Does It Work
Index 1.
Learn How To Trade Forex
2.
Why Is Leveraged Forex Trading Popular With Investors?
3.
How Does Forex Trading Work?
4.
Buying
5.
Selling
Learn How To Trade Forex ď‚— Forex trading allows you to speculate on the changes in the
currency strengths over time, buying or selling and currencies trading one against the other. ď‚— Forex traders seek to profit from the variations in the
exchange rates between currencies, speculating on whether one currency's value, like the pound sterling, will go up or down to another.
ď‚— The foreign exchange market is the most traded in the world,
making it a highly liquid and dynamic market. ď‚— The high market liquidity implies that the prices can change
rapidly in response to news and short-term events, building multiple trading opportunities for the retail forex traders.
Why Is Leveraged Forex Trading Popular With Investors? 1. Trade on rising and falling markets ď‚— Trade in falling markets as well as rising markets. 2. Leveraged product ď‚— Use the small amount of money to control the larger position. 3. Volatility ď‚— Currency prices are constantly fluctuating with each other offering various trading opportunities.
4. 24-hour trading ď‚— Not restricted to the physical exchange hours. 5. Liquidity ď‚— The Spreads tend to remain tight meaning your dealing costs will remain low.
How Does Forex Trading Work? Forex is always quoted in pairs, regarding one currency
versus another. For example, USD/GBP the fluctuations in the exchange rate
between those are where a trader looks to make their profit. The first currency is the one that you think will go up or
down against the second currency.
ď‚— When the trading currencies, you can think of the future
direction of the market, taking either a long (buy) or short (sell) position depending on whether currency’s trading value will go up or down.  Forex price movements are triggered by the currencies either
appreciating in the value or depreciating.
Buying ď‚— When trading currencies, you buy the currency pair if you
believed that the base currency would strengthen against the counter currency, or the quote currency weaken against base currency. ď‚— So, if we think that the Euro will strengthen against US
Dollar, then we place a buy trade.
ď‚— For every point or pip, the Euro rises against Dollar, and we
will make a profit. ď‚— It is important to recognize that the price of the euro
weakens against the US Dollar, and we would make a loss for every pip it falls.
Selling 1.
Alternatively, you would sell the currency pair if you believed that base currency would weaken in value against counter currency.
ď‚—.If we believe the Euro decrease in value against the US
Dollar, we place a sell trade, and for every pip, the Euro falls against US Dollar you make a profit.
Should the value of the euro rise against dollar then you make
a loss for each pip it rises. Leveraged trading means you can put up the small amount of
money to control a much larger amount. It means you can leverage money further, but it means that
losses will be magnified as well, so you should manage the risk accordingly.