Starting to trade forex is refers to selling or buying of one currency in exchange for another. the heaviest traded market in the world is the forex exchange because businesses, people, and countries all participate in it.
Without much capital, it’s an easy market to get into. When you go on a trip and want to convert your Rupiah to U.S. dollar to buy some things, you’re participating in the global market called foreign exchange market.
Relative to other currencies, the demand for a certain currency will either down or push it up in value at any time. There are many things you need to know so that you can take the next step in forex trading with best broker forex.
Deep Learning About Currency Pair Primer
Currency pair and their signify, it’s important to learn basically before you enter your first trade. In this forex market, currencies always trade in pairs. For example, when you exchange Australian dollar (AUD) to U.S. dollar (USD). there are two currencies involved.
When you starting to trade forex the value of one currency relative to the other will be shown as the result of the exchange. For example, you will know how many Australlian dollar (AUD) it takes to buy one euro (EUR).
To designate specific currency pairs, the forex market always uses symbols. EUR is the symbol for euro, the Australlian dollar is symbolized by AUD, so the euro /Australian dollar pair is shown as EUR/AUD. And there are other commonly traded currency symbols.
Those symbols are CAD (Canadian dollar), GBP (British Pound), JPY (Japanese Yen), CHF (Swiss Franc), and NZD (New Zeland dollar). the amount of the second currency takes to buy one unit of the first currency is reffered by the price.
For example, it costs 1.3635 U.S. dollars to buy one euro. It means that price of the EUR / USD is 1.3635. the other hand, it costs 0.7334 euros to buy one USD as the result of 1 divide by 1.3635 (whatever the current rate).
So you just have to flip the pair to USD/EUR. As transactions occur 24 hours a day during the week around the globe, the currency pair constantly fluctuates. More than that, the price of currency pairs is described by a small amount of new terminology.
Understanding Market Pricing in Forex
You’re one step closer starting to trade forex, once you understand it and how to calculate your trade. Many currency pair will move sometimes more than 100 pips, or less than 50 pips per day depending on overall market conditions.
A pip is an abbreviate word for point in percentage and in currency pair, it’s used to indicate the fourth decimal place. Or if the JPY is in the pair, the pips used to indicate the second decimal place.
For example, if you starting to trade forex and bought the pair at 1.3500 and sold it at 1.3550, you got a 50-pip profit. So when the price of the EUR/USD moves from 1.3500 to 1.3550, that’s a 50 pips move.
You can get profit depends on how much of the currencies you purchased. For example, if you bought 1,000 units in U.S. dollars or called a micro lot, each pip is worth $0.10, so your profit will be $5 for a 50 pip gain.
As a result of 50 pips x $0.10. if you bought a mini lot (10,000 units) each pip is worth $1. you will get profit ends up being $50. and your profit from the bought standard lot (100,000 units) is $500.
To help you on forex trading, you can use the professional forex broker. Didimax forex broker is advanced broker forex that can make you feel comfortable to become a forex trader. starting to trade forex by choosing the best and right partner like didimax.
