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How to Trade Forex

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How to Trade Forex

Postby Talha123 » Fri Aug 07, 2015 3:51 am

Trading forex can be exciting as well as risky depending upon the knowledge a person has. It’s estimated that the forex markets make a trade of about $5 trillion on any given day. This means any person can earn a fortune by just predicting the direction of the market. Forex trading online can be done in a number of ways.
Learning the basics is mandatory:
The type of currency which is being spent is the base currency while the one that is being bought is the quote currency; in forex trading one currency is sold to purchase another one.
Exchange rate is which an investor must spend on the quote currency to buy the base currency.
A long position indicates that an investor wants to purchase the base currency and sell the quote currency
A short position is just opposite and indicates that an investor wants to purchase the quote currency and sell the base currency.
Bid price is the price at which the broker is ready to purchase the base currency in exchange for the quote currency. The bid is the best price at which the investor is ready to sell the quote currency in the market.
Offer or ask price is the price at which the broker will sell the base currency in exchange for the quote currency and it’s best available at which the investor is ready to purchase from the market
Spread is the difference that is there between the bid price and the ask prices.

Reading the forex quote is crucial
This shows two numbers; the bid price displayed on the left and the ask price on the right side.
Deciding what currency to buy or sell is the next important step which requires making predictions about the economy.
It’s always advised to look at the trading position of the country. An investor must see that how many goods a country has in demand which might mean exporting goods to make money which would mean boosting the country’s economy and finally the value of the currency. Also, when anticipating the currency value one must see that whether an election are going to take place in the country which can help in understanding that the currency value will appreciate or depreciate. Another way of estimating value is by reading economic reports which involve GDP reports, employment and inflation reports that can have a great effect on the currency value.

Learning how to calculate profit is important
A pip is the measure of change value between the two currencies and one pip is equal to 0.0001 of the change in value
Multiplying the number of pips with the exchange rate is needed which tells how much the account has appreciated or depreciated in value

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