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Basic forex trading concepts for new traders

Forex trading is not amicable to newcomers who rely solely on luck. While some seasoned traders attribute their success to their stars, a lot of them succeed because they have a solid foundation on the largest financial market in the world. With trillions of dollars traded every single day, wouldn't you want to make some money from it? If you do, take the time to learn some of the basic concepts practiced in the foreign exchange market.

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Basic forex trading concepts for new traders

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  1. Basic Forex Trading Concepts for New Traders

  2. Forex tradingis not amicable to newcomers who rely solely on luck. While some seasoned traders attribute their success to their stars, a lot of them succeed because they have a solid foundation on the largest financial market in the world. With trillions of dollars traded every single day, wouldn't you want to make some money from it? If you do, take the time to learn some of the basic concepts practiced in the foreign exchange market.

  3. The first thing you need to know is forex trading involves currencies from around the world. However, you don't need to venture into little known currencies – at least not yet. At this point, it would be better to focus on major currencies such as: US Dollar (USD), Japanese Yen (JPY), British Pound (GBP), Swiss Franc (CHF), European Union Euro (EUR), New Zealand Dollar (NZD), Canadian Dollar (CAD), and the Australian Dollar (AUD). These currencies are traded through a forex trading platform.

  4. The second concept is you need to look for forex brokers, which are firms that provide you a platform so you can trade FX (foreign exchange). What should you consider when looking for a broker? One is they should be associated with major banks in the country they are located in. A dozen of banks in their association would be a very good number. Your broker should also offer a free account, wherein you can practice trading. When you're ready to trade for real, you can simply call them up and say you'll upgrade to a regular account. You should be familiar enough with the broker's forex trading platformbefore you open a regular account.

  5. The third concept is you'll need a trading platform, which is, as earlier mentioned, will be provided by forex brokers. What is a platform? It is a computer program or a software that lets you buy and sell currencies. Apart from their primary role, these platforms also have certain features that are meant to help you make rational trading decisions. The MetaTrader 4 platform, for example, has windows that display several indicators that affect the movement of a certain currency. These indicators will show you trends that you can analyse and use as basis for your buy and sells.

  6. The fourth concept is you'll need to learn about the money you're trading. Are you into Australian Dollars? Or perhaps US Dollars? Or the Japanese Yen? Whichever currency you choose, it is important that you determine what certain events or trends cause it to gain or lose value as opposed to another currency. Forex tradingis being able to buy low and sell high and the best way to do this is to be able to predict – based on data – where the currency you're targeting is headed for.

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