Forex Trading Basics and Overview

Forex trading is one of the leading money making opportunities available online. Understanding it can help you make an additional income. Before you jump in and start trading, you should have a little understanding about it. Forex trading is the buying and selling of different world currencies. A forex deal occurs when one individual buys a single currency and sells a different currency at the same time. Trading is always done in pairs like USD/JPY, CHF/USD, Euro/USD and so forth. You will only make a profit when you buy at lower prices and sell the same for a higher price.

How to Start Forex Trading in Indonesia - IMC Grupo

Overview of forex trading
The largest trading market in the word is the forex market. It has a daily average turnover yield of almost $2 trillion with a figure which is thirty times larger than the total volume of United States based equity trades. It is a very unique system since trading is done between two counterparts either through telephone connections or an electronic network Unlike futures and stock markets, forex trading does not have a centralized location and trading is done round the clock. Trading starts when financial trade centers in Sydney begin their day and moves around the world to Tokyo, London and finally New York.

Before you start trading in forex, you must first learn how to read forex quotes. These quotes are always listed in pairs. For example, USD/JPY 108.3. The currency that is listed first is referred to as’base currency’, and has a constant value of a single unit The other currency listed is referred to as ‘counter’. In the example given, you would come up with the understanding that one single United States dollar is equivalent to 108.3 Japanese Yen. In short, a quote will always show you the relative value of one currency to another.

There is another type of quote which is known as a two-sided quote. For example, EUR/USD 1.3452/1.3440, consisting of an ‘ask’ and a ‘bid’ is occasionally seen The price at which you can buy the base currency is the ‘ask’, and the price you can sell the base currency is the ‘bid’. The ‘spread’ is the difference between the ‘bid’ and ‘ask’. In the example, you can buy 1 Euro with $1.3440 or sell it with $1.3452. Currency brokers are able to make a profit with these differences and that is how they are also able provide services to individual investors without charging commission fees.

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