PIPSThis 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
Currency
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
Margin
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.
AdChoices
Fund and withdrawn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 The ease of funding your money into your trading account are equally important to the available options for withdrawn of money from your trading account.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.
Final words
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.
source http://www.articlesbase.com/currency-trading-articles/5-things-you-need-to-know-about-forex-trading-5774744.html
Written by Kathy Lien—chief strategist for the number one online currency broker in the world—Day Trading the Currency Market reveals a variety of technical and fundamental profit-making strategies for trading the currency market, and provides a detailed look at how this market actually works. It contains actionable information and strategies, which can help you enter this highly competitive arena with confidence and exit with profits.
Editorial Reviews
Review
"...a leap forward in sophistication..." (The Technical Analyst, June 2006)"…well researched ideas…Lien’s expertise really shines through…" (Shares, August 2006)
From the Inside Flap
The currency/foreign exchange (FX) market is by far the largest
financial market in the world, with trading volumes surpassing $1.9
trillion a day. Although primarily dominated by a worldwide network of
interbank traders, a new era of Internet-based communication
technologies has recently allowed individual investors to gain direct
access to this popular—and profitable—market.
Written by Kathy Lien—chief strategist for the number one online currency broker in the world—Day Trading the Currency Market reveals a variety of technical and fundamental profit-making strategies for trading the currency/FX market, and provides a more detailed look at how this market actually works.
Designed for both the advanced and novice trader, Day Trading the Currency Market contains something for everyone. It touches on the major FX market basics or currency characteristics that all traders—particularly day traders—need to know, and contains actionable information on which you can base some of your trading strategies. This comprehensive guide opens with a straightforward discussion of general issues, such as the emergence of the foreign exchange market, who the major players are, and significant historical milestones, but quickly delves into more detailed topics in the following sections:
- What moves the currency market—factors that impact both long- and short-term price movements
- What are the best times to trade for individual currency pairs—through an outline of major currency pair trading activity (in different time zones), you'll discover when pairs are most attractive
- Trade parameters for different market conditions—teaches you how to first profile a trading environment and then know which indicators to use for that trading environment
- Technical trading strategies—covers some of the most important trading strategies for day traders and swing traders. They run the gamut, from "Fading the Double Zeros" to the "Inside Day Breakout Play"
- Fundamental trading strategies—illustrates how to trade off commodity prices, fixed income instruments, and option volatilities; and covers intervention-based trades as well as the secret moneymaking strategies used by hedge funds
- A profile of major currency pairs—discusses the unique characteristics of each major currency pair, from what drives their price action to which economic data releases are most important
From the Back Cover
Praise for DAY TRADING the CURRENCY MARKET"This is an extraordinary
book that is many levels above other books on currency trading. It's
filled with practical tips deriving from Kathy's experiences as a trader
at JPMorgan and as an analyst and educator to online traders. A
must-read for novice and experienced traders alike, this book will save
readers a lot of money in expensive trading lessons."
—Drew Niv, Chief Executive Officer, Forex Capital Markets LLC
"I thought this was one of the best books that I had read on FX. The book should be required reading not only for traders new to the foreign exchange markets, but also for seasoned professionals. I'll definitely be keeping it on my desk for reference. "The book is very readable and very educational. In fact, I wish that Kathy's book had been around when I had first started out in FX. It would have saved me from a lot of heartache from reading duller books, and would have saved me a lot of time from having to learn things the 'hard way'. "I look forward to reading other books from her in the future."
—Farooq Muzammal, Head of Foreign Exchange, Europe, Refco
"Kathy's book is an indispensible tool for Forex traders, whether you are a professional or novice. It not only lays the groundwork for an in-depth understanding of Forex trading, it also contains numerous fundamental and technical strategies . . . I suspect that many traders will be keeping Kathy's book within arm's reach for many years to come."
—Eddie Kwong, Executive V.P./Editor in Chief, Tradingmarkets.com
"In Day Trading the Currency Market, Kathy Lien provides traders with unique, thoughtful, and profitable insight on trading this exciting market. This book should be required reading for all traders, whether they are novices to Forex or experienced professionals."
—Cory Janssen, Cofounder, Investopedia.com
"There are aspects to trading currencies that are different from trading equities, options, or futures. In this book Kathy Lien gives a deep insight into all the mechanisms that take place in the currency markets. Any currency trader will gain more confidence in their trading after reading this book."
—Jayanthi Gopalakrishnan, Editor, Stocks & Commodities magazine
"Kathy has done a brilliant job with this book. She speaks directly to traders and gives them guidance to improve their performance as Forex traders. I took some notes and ideas from the book myself that are going to be very useful for my business."
—Francesc Riverola, CEO, ForexStreet SL
—Drew Niv, Chief Executive Officer, Forex Capital Markets LLC
"I thought this was one of the best books that I had read on FX. The book should be required reading not only for traders new to the foreign exchange markets, but also for seasoned professionals. I'll definitely be keeping it on my desk for reference. "The book is very readable and very educational. In fact, I wish that Kathy's book had been around when I had first started out in FX. It would have saved me from a lot of heartache from reading duller books, and would have saved me a lot of time from having to learn things the 'hard way'. "I look forward to reading other books from her in the future."
—Farooq Muzammal, Head of Foreign Exchange, Europe, Refco
"Kathy's book is an indispensible tool for Forex traders, whether you are a professional or novice. It not only lays the groundwork for an in-depth understanding of Forex trading, it also contains numerous fundamental and technical strategies . . . I suspect that many traders will be keeping Kathy's book within arm's reach for many years to come."
—Eddie Kwong, Executive V.P./Editor in Chief, Tradingmarkets.com
"In Day Trading the Currency Market, Kathy Lien provides traders with unique, thoughtful, and profitable insight on trading this exciting market. This book should be required reading for all traders, whether they are novices to Forex or experienced professionals."
—Cory Janssen, Cofounder, Investopedia.com
"There are aspects to trading currencies that are different from trading equities, options, or futures. In this book Kathy Lien gives a deep insight into all the mechanisms that take place in the currency markets. Any currency trader will gain more confidence in their trading after reading this book."
—Jayanthi Gopalakrishnan, Editor, Stocks & Commodities magazine
"Kathy has done a brilliant job with this book. She speaks directly to traders and gives them guidance to improve their performance as Forex traders. I took some notes and ideas from the book myself that are going to be very useful for my business."
—Francesc Riverola, CEO, ForexStreet SL
About the Author
Kathy Lien is the Chief Currency Strategist at Forex Capital Markets LLC (FXCM). She is responsible for providing research and analysis for DailyFX, including technical and fundamental research reports, market commentaries, and trading strategies. Prior to joining FXCM, Kathy was an associate at JPMorgan Chase where she worked in cross-markets and foreign exchange trading. She has vast experience within the interbank market using both technical and fundamental analysis to trade FX spot and options. She also has experience trading a number of products outside of FX, including interest rate derivatives, bonds, equities, and futures. Kathy has written for CBS MarketWatch, Active Trader, Futures, and SFO magazines. She has taught currency trading seminars across the country, has appeared on CNBC, and is frequently quoted on Bloomberg and Reuters.
Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings (Wiley Trading) Click here to read amazon customer reviews and rating
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