The basics of Forex trading unleashed
Currency trading is new for many traders and people do not have much knowledge about Forex market. Due to this some people lose their money instead of gaining in this trade. Below are some points which a new trader should go through in order to know about the Forex trading basics.
FOREIGN EXCHANGE MARKET: This is a very vast and liquid market which operates round the clock .In this market there is no central trading exchange to regulate the market .Mostly the trading is done through electronic networks or by telephone.
FOREIGN EXCHANGE: Foreign exchange means transaction of two currencies.
SPOT MARKET: Spot market can be defined as a market where currencies are bought and sold at current rate.
CURRENCY PAIR: In Forex trading one currency is bought and the other one is sold. These two currencies together are called currency pair.
EXCHANGE RATE: Exchange rate is the cost of one currency expressed in terms of other currency.
BASE CURRENCY: First currency of the pair is known as base currency .This is the currency in which your account is denominated in.
COUNTER CURRENCY: The second currency of the pair in a currency exchange pair is called counter currency.
FCM: FCM means futures commission merchants. It is generally an individual or an organization who accepts money from clients.
MARKET MAKER: A market maker in currency trading provides rates and liquidity for a currency pair and is always for buying and selling a particular currency at the price quoted .A market maker earns his commission from the spread which is between the bid and offer price.
DEALING DESK: Dealing desk in Forex trading is one that provides information about rates, liquidity and volume of the trade.
NDD: NDD means no dealing desk .Such NDD broker uses external liquidity providers and provides liquidity to his/her clients and has no dealing desk .Sometimes such NDD brokers increase the spread in order to earn their commission .
COUNTER PARTY: One of the traders in a currency transaction.
BID PRICE: Bid price is the price at which one can sell a base currency and is displayed on left. It is also called sell quote.
OFFER PRICE: It is the price at which one can buy a base currency and is displayed on right. It is also known as buy quote.
SPREAD: It is the difference between bid price and offer price or the difference between sell quote and buy quote.
PIP: It is a smallest increment in the price of a currency and is also called point in currency trading.
PIP VALUE: It is the value of a pip which can be fixed or variable. Pip value depends on the currency pair.
FOREX ECN BROKER: ECN means electronic communication network. ECN broker also don’t have their own help desk. These brokers provide a marketplace where market makers and traders can enter in bids and offers and help them by filling their trades by liquidity providers. ECNs generally charge very little fees for matching the trades between a trader and a liquidity provider.
LOT: Standard size of a transaction in Forex trading is called a lot.
MARGIN AND LEVERAGE: Margin is the amount needed to open a position. 1% margin is needed for opening a position. So a trader can leverage his account up to 100 time .So the leverage ratio in the Forex market is 100:1.
Currency Trading in India
Before starting currency trading one should be aware of risk appetite involved in a currency exchange. One should invest only that money which he or she can afford to lose because there is a great risk in Forex trading online. One should take advice from an experienced financial advisor before stepping into Forex market. Moreover the trading should be done in popular currency pairs which are very popular among the traders so that the liquidity is increased.
Forex Trading & Currency trading are same the user uses the terminology for their sake.
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- Currency Trading is the easiest way to start online, Best way to earn daily.
- Through the currency trading concept you can withdraw your profits daily. Best concept in the world.
- All those who have decided OR
- Want to change their living, want to be financially free using Currency Trading Concept.
- Please join free here below.