This is the most basic and must be understood at all times for all Forex Trader. A pip is the smallest measurement of change between 2 currency pair. This is either express in 2 decimal place or 4 decimal place. Some broker quoted 3 or 5 decimal places and these are call fractions of pips or pipettes. EURUSD a pip is 0.0001
This is the next important portion whereas in stock and shares, company are studied and research. For Forex, it is the currency or the country that it is dependent on. For USD is United State Dollar and EUR is Europe Euro and JPY is Japan Yen and the list goes on.. As the currency is buy and sell with currency itself (unlike stock and share with lot number), therefore the currency are traded in pairs instead. Thus you will see counter like USDJPY, EURUSD, EURJPY, etc
This is most important and few trader tends to concentrate on. Margin is required at all times when you open or hold a trade. This is the capital that is used to hold your trades plus the trading profit (loss) and your floating account balance. This is different from leverage and always remembers to have at least 200% margin or more base on your trading maximum drawdown and total no. of trades open.
Free trading account
With widespread of internet online trading and many Forex Broker coming up in the market, many will provide free trading account or free demo account before you sign up for a live trading account. Take this chance to trade and perfect your trading strategy. It is free to sign up and install the trading platform software. There are lots of tutorial and guides for you to trade. This make learning stress free as you are using paper money to trade live prices.
Fund and withdrawn
Next important thing you need to know is the Forex broker that you are opening your trading account (Demo or Real account). The ease of funding your money into your trading account are equally important to the available options for withdrawn of money from your trading account. This can be easily check by running a Google search on the company and reading up on forum for scam and dishonest trading report.
Looking at Charts
Knowing how to look at charts is the basic of every trading in Forex. By observing charts at different time segment (1 minute, 5 minute, 15 minute, 1 hour, 4 hour and 1 day) you can know the trend, support and resistance of the currency. In some cases, you can predict the trend for the next few days and successfully determine the profit and stop loss according to resistance and support level.
This is the only trading strategy that works for all traders. In currency, the only way to make money is buy low sell high or sell high buy low.
An accessible guide to trading the fast-moving foreign exchange market
The foreign exchange market, or forex, was once dominated by global banks, hedge funds, and multinational corporations, but that has all changed with Internet technology and the advent of online forex brokers. Now, hundreds of thousands of traders and investors around the world can participate in this profitable field.
Written by forex expert Kathy Lien, The Little Book of Currency Trading will show you how to effectively invest and trade in today's biggest market. Page by page, she describes the multitude of opportunities possible in the forex market, from short-term price swings to long-term trends, and details practical products that can help you achieve success, such as currency-based ETFs.
- Explains the forces that drive currencies and provides strategies to profit from them
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This currency trading book provides readers with real, practical information on how to trade the foreign exchange market effectively. It begins by covering introductory information on the forex market, including basic trading mechanics and the benefits of forex trading, and then goes on to describe specific currency trading methods and skills in step-by-step detail. This includes highly practical information on technical and fundamental analysis, risk and money management, and powerful forex trading strategies. These strategies have proven extremely effective in helping traders play the forex game to win.
JAMES CHEN, CTA, CMT (Montville, NJ) is Chief Technical Strategist at FX Solutions, a leading foreign exchange broker. An expert on forex trading and technical analysis, he is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT). Mr. Chen writes daily currency analysis, leads forex trading seminars, and has authored numerous articles on currency trading strategy and technical analysis for major financial publications. These include Forbes.com, Futures Magazine, Technical Analysis of Stocks and Commodities Magazine, and Stocks, Futures and Options (SFO) Magazine.
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Forex trading can be remarkably lucrative—and complex, confusing, and risky. Too many investors dive right into Forex, suffering big losses. If you want to trade currencies successfully, read this book, take your time, and plan accordingly. The $4 trillion Forex market will be waiting.
All About Forex Trading walks you through everything you need to know to make currency trading a vibrant part of your diversified portfolio and generate handsome returns—regardless of what is happening to stocks and bonds. Whether your investing style is conservative or aggressive, this no-nonsense guide has what you need to build a powerful Forex trading strategy. Learn all there is to know about:
- What (and who) drives currency prices
- Investment vehicles for Forex trading
- Technical analysis techniques
- Key fundamental indicators
- Navigating the economic calendar
- All the traded currencies—from the Americas to Europe to Asia
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