Forex Basics Articles
Leverage and Margin
Let's say you decided to invest in FOREX market. For starters, you have to open a margin account (minimum account size) with a FOREX broker of your choice. As soon as you deposit your money you will be able to enter the trading market. Your broker will let you know what is the requirement per position (lot) traded.
What is Lot?
Let's start with an example that everyone can relate to. When you buy eggs in the grocery shop, it is impossible to buy just one egg, isn't it? Eggs are sold in a set of 12 or more.Now, back to FOREX world!
Long and Short Positions
There are two more equations to remember:
Long = buy
If you want to buy a currency (meaning that you want to BUY the base currency and SELL the quote currency) at one price and sell it later on at a higher price, then you are in trade's talk taking a "long position" or "going long".
BID, ASK and SPREAD
All Forex quotes display two prices, the bid and the ask.
BID: The price of the base currency that the dealer is willing to pay in exchange for the quote currency. In simple words, the bid is the price at which you (trader) will sell.
Base and Quote Currencies
The first currency in a currency pair (the one on the left side from the slash "/ ") is called base currency. Base currency always has a value of 1. The second currency in the currency pair (the one on
the right side from the slash "/") is called counter currency or quote currency.
Majors and Currency Pairs
Most commonly traded currencies are referred to as MAJORS. Below is the list of currency abbreviations which we recommend to memorize.
Currency and Exchange Rates
Confused with currency exchange!
How can you trade something that you can't see or touch? Since trading currencies isn't something physical FOREX might seem confusing in the beginning. One way to brush the confusion away is to think of buying a currency in the same way as you think of buying shares in a particular country.
Forex - What, Who, Where and Why!
What is FOREX?
FOREX stands for Foreign Exchange or, in other words, currency trading market. Currently FOREX is the largest and fastest growing financial market in the whole world with a daily volume of almost 3 trillion dollars. Quite a number, won't you say? That is 30 times higher then the turnover of all USA equity markets combined! Other names for FOREX include "Retail forex", “FX” , "Spot FX" and even just "Spot".
Pivot Points in Forex Trading
Pivot points strategy has been around for a long time and is very important for forex traders. Pivot points show us the levels at which the direction of price movement may change. With couple of simple calculations forex traders are able to have a general idea where the price movement is heading to during the day.
Fibonacci Numbers in Forex
Fibonacci numbers! Doesn't that sound a lot like an enormous chapter in high school mathematics' book? If that's what you think then you are absolutely right. We are indeed talking about those kinds of numbers. Fibonacci numbers are a sequence of numbers formed as follows:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55… etc