Trading Currency Fundamentals: Currency Trading Data For Beginners

Article by Karen Winton

A lot of people nowadays trade FX online regularly. This is because the FX market is the most liquid and largest trading market there is. Traders actually have more chances of earning sizable amounts of money even in just a short period of time. Of course, the very first subject matter you’ll come across when you learn to trade Forex is this: trading currency basics.

The Foreign Exchange Market: A Closer Look

What people trade in the currency market are the so called-currency pairs. A currency pair may actually be described as the comparison of one currency over another in terms of value. Among the most popular pairs are: GBP/USD, USD/JPY, AUD/USD, etc.

For instance, if you decide to bet on the AUD/USD pair, then, fell that the AUD will rise and the USD will fall, you can go long and purchase the AUD, while you go short and sell the USD.

A currency trading information for newbie traders is this: in a currency pair, the first currency is called the ‘base currency’, while the second currency is called the counter currency.

Trade FX Online Terminologies

Learning trading currency basics also means understanding what the common currency trading terminologies mean:

1. Bid Price and the Ask Price

Each and every pair of currencies have the bid price, which is the actual price that you and your broker are willing to pay for purchase, and the ask price, which is the actual price that you want to sell a specific currency for. People who learn to trade Forex should always remember that the bid price has to be lower than the ask price.

2. The Pip

The term ‘pip’ is also among the first terms you’ll hear when undergoing a trading currency basics class. The pip is dependent on the incremental movements of currencies. The pip is short for ‘price interest point’. For example, if a currency pair moves from 1.3545 to 1.3555, the total number of pips is: 10.

3. Leverage

The concept of leverage is also an essential currency trading information. The said concept enables currency traders to trade without depositing the full amount. More often than not, you only need to deposit.25%, or sometimes, 1% to start opening a trade, or a position.

Completely understanding trading currency basics is a must for those who want to learn to trade Forex. Bear in mind too that to successfully trade FX online, you have to research currency trading information and see to it that you are updated on the market trends, and any other related information about Forex.

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