The Seven Most Traded Currencies in FOREX
Currencies are traded in dollar amounts called “lots”. One lot is equal to $1,000, which controls $100,000 in currency. This is what is known as the "margin". You can control $100,000 worth of currency for only 1,000 dollars. This is what is called “High Leverage”.
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:
USD - The US Dollar EUR - The currency of the European Union "EURO" GBP - The British Pound JPN - The Japanese Yen CHF - The Swiss Franc AUD - The Australian Dollar CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
Some of the common PAIRS are:
EUR/USD Euro / US Dollar "Euro"
USD/JPY US Dollar / Japanese Yen "Dollar Yen"
GBP/USD British Pound / US Dollar "Cable"
USD/CAD US Dollar / Canadian Dollar "Dollar Canada"
AUD/USD Australian Dollar/US Dollar "Aussie Dollar"
USD/CHF US Dollar / Swiss Franc "Swissy"
EUR/JPY Euro / Japanese Yen "Euro Yen"
The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.
If this seems confusing then you’re in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.
So why is it important to know about the base/counter currency? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions.
You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
How To Prepare Yourself For Success In Forex Trading
One of the best ways to check out Forex trading and see if it is truly something that you like and feel that you can make money in is to open a Forex demo account.Demo trading is an indispensable aspect of every retail trader's career. You will be setting yourself up for failure if you jump into forex market without practice as you can blow your account in a flash. You probably have heard that 90% of retail traders loose their account value within one year. You wouldn't want to risk your money on something that you know nothing about. So operating a demo account allows you to learn the business without losing money.
Most Forex brokers provide this service at no cost to retail traders with the hope that the trader will convert their demo account into live account after they have gained confidence. Opening a demo account typically take a few minutes. You should not have to give your personal information or pay anything to a broker to obtain a demo account. With a demo account you can trade the forex markets using the same state-of-the-art software packages that professional Forex traders around the world are currently using to make real-time, live currency trades
With a demo account new traders can familiarize themselves with their brokers trading platform. They learn how to place buy and sell orders, as well as how to set stop orders, take profit, and make price projections. You will feel the same emotion just as if you are risking your hard-earned money - well almost. You will be confronted with the problem of managing losses probably more than the elation of winning. And you can also experience the same dynamic market actions and go through the same process of making decisions based on breaking news, reacting to charting patterns, and tracking your performance the same way professional Forex traders do.
The most effective way to accomplish the goal of becoming a successful forex trader is to trade with a really good set of trading strategies. You must have a plan of what to do when specific trading environment develops. When will you buy or sell, what conditions will make you fold the trade and take a loss, what is your target objective, and why are you taking this trade are some of the pertinent questions you must provide answers to before entering a trade. Any demo software you choose will most likely have the necessary technical indicators you need.
Once you have downloaded the software you can then set up your demo account and start drawing trend lines, marking support & resistance levels, monitoring moving averages, or monitoring the news and reacting to the volatility that follow. Then you can follow your plan and document your trading results. For realistic results, you should keep a log of your trading efforts. A spread sheet containing the market condition at the time of the trade, the entry price, stop loss level, and target level should be maintained for each trade.
You should continue to practice until you can demonstrate a string of profitable trades, probably punctuated with losses. The probability of winning consistently in live trading when you've lost consistently in demo trading is very slim. On the other hand, be warned that making big gains in a demo-account does not guarantee profits in live trading.
May the Pips be on your side.
Will I get rich from Forex? Definitely!
The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.5 trillion changing hands every day.
That is larger than all US equity and Treasury markets combined!
Unlike other financial markets that operate at a centralized location (i.e. stock exchange), the worldwide Forex market has no central location. It is a global electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of national currencies. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. With advances in technology over the years, however, the Forex market is now available to everybody, from banks to money managers to individual traders trading retail accounts. The time to get involved in this exciting, global market has never been better than now. Open an account and become an active player in the largest market on the planet.
The Forex Market is very different than trading currencies on the futures market, and a lot easier, than trading stocks or commodities.
The FOREX plays a vital role in the world economy and there will always be a tremendous need for the exchange of currencies. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Germany can sell products in the United States and be able to receive Euros in exchange for US Dollar.
So you know how it is financially rewarding if you traded successfully in the forex market every single day. Whether a bad economy or not, it has made millions taking advantage of the flactuations in the market. And the good thing is that trading is now available to all of us, having internet access and right knowledge creates wealth.
Ok, ok , i got your point, how do I start trading in forex?
Well, forex is like any other investment or business, it has signifitcant amount of loss sometime.But it is better than having a job because you can work for so little time, yet earn so much more. There is a career waiting for people who are willing to exert their effor, time and mind to learning and benefiting from the Currency Market.
It is important for traders to have consistent learning in the market, and not just giving that role of trading to their brokers. The good thing is there are many learning modules out there available through the online universe. But not all guarantees 100% success on trading. Of course no person or product can be dumb enough to guarantee your success. It also demands effort on your part. A factor you should find when purchasing or looking for information is its reputation and quality.
Poor learning = higher risks and losses
Quality learning = happy trader
Be it new in trading or experienced, constant learning is what makes wealth, at times today, " the more you know, the more money you make". And a learning system like the Forex Profit Accelerator can surely give you all the support you need to be successful in Currency trading.
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