Forex trading basics you need to know

1. Forex trading basics you need to know. Forex is short for the foreign exchange market and is also referred to as the fx market. It is essentially buying or selling one currency exchange in exchange for another. The forex market is the most active market in the world because people, businesses, and countries all take part in it, and it is easy to get into the market with little capital. You become a part of the foreign exchange market when you exchange your US dollars for euros on a trip. The demand for one currency pushes it either up or down in value at any point in time relative to other currencies. Now, let’s look at some basics about the currency market so you can take the next step and get started with one of the best forex trading platforms. Currency Pairs Primer The whole of forex trading is done in pairs, currency pairs to be precise, and hence it is important you learn about them and what they stand for. Currencies are always traded in pairs in the fx market. When exchanging US dollars for euros, there are two currencies you are working with, so the exchange shows the value of one currency relative to the other. Let’s take the EUR/USD currency pair; for example, the EUR/USD price indicates how many US dollars (USD) you need to buy one euro (EUR). The market uses symbols to designate currency pairs. EUR stands for euro, USD stands for dollar, and the euro/US dollar is denoted as EUR/USD. Other more profoundly traded currency pairs are  AUD (Australian dollar),  GBP (British pound),  CHF(Swiss franc),  CAD (Canadian dollar),  NZD (New Zealand dollar)  JPY (Japanese yen). Every forex pair has a market price assigned to it. The price shows how much of the second currency is required to buy one unit of the first currency. Let’s suppose that the price of the EUR/USD currency pair is 1.3456, meaning you need 1.3456 US dollars to buy one euro. If you flip the pair to USD/EUR, you will be able to know how many euros it costs for one US dollar. Now, you divide one by 1.3456. The result is how many euros you need to buy one USD based on the current market price. The currency pair price is constantly fluctuating, with transactions occurring around the globe, 24 hours a day during the week. A quick look at the market pricing A pip is a point in percentage; it indicates the fourth decimal place in the currency pair or the second decimal place when JPY is in the pair. Currency pairs typically move about 50 to 100 pips per day; depending on overall market conditions, they may move more or less. Pip value is the price of each pip. When it comes to trading, the first currency listed in the pair is the directional currency on a forex price chart. If the price moves up on EUR/USD, it means the euro is moving higher against the US dollar. If the price on the chart falls, the euro drops in value against the dollar.

2. Before you start trading on forex trading platforms, see how prices move in real time and place some fake trades with an account called the “paper trading account” so you can learn trading without risking your actual money. There are many online or mobile phone app-based paper forex trading platforms on which you can start paper trading. They work the same as a live trading account minus the risk. In conclusion, You can try your hands on the many online simulators available for practicing day trading and honing your forex trading strategy and skills. However, understanding the basics will help get a hold of the forex trading data or the rising and falling price in a chart.