Basics about Forex Trading

Forex trading has become one of most lucrative online money-making opportunities. It is possible to make additional money by learning about it. Learn a bit about forex trading. A forex deal is when you buy and sell different currencies. In a Forex deal, an individual purchases a currency and then sells another at the same moment. How to trade forex?

Learn about forex trading

The Forex market is the largest trading marketplace in the world. With a daily volume turnover average of $2 trillion it is more than 30 times the amount of US equity trades. A unique trading system exists, whereby trades are conducted via electronic network or phone connections between two counterparts. Like futures trading and the stock market, forex does not operate from a central place and trades are conducted round-the-clock. Trading is initiated when Sydney financial centres begin trading and continues to Tokyo then London until it reaches New York.

It is essential that you learn forex quotes in order to trade. All quotes listed are in pairs. USD/JPY for instance is listed as 108.3. As the currency which is first on the list is referred as “base currency”, it is always equal to one unit. Other currency in the table is referred as “counter”. As a result of this example, the reader would have the impression that one US dollar was equivalent to 108.3 Japaneseyen. You can see that a currency quote shows the relative worth of one to another.

The two-sided price quote is another quote type. EUR/USD 1.3452/1.3444, which includes an ‘ask and bid’, may be occasionally seen. The ask’ represents the cost of buying the base currencies, while the bid’ indicates the cost to sell them. Spread: The difference between bid and ask. If you follow the above example, then it is possible to sell or buy 1 Euro by paying $1.3440. Currency brokers profit from this difference and are therefore able to provide service to individual investors free of charge.

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