CURRENCIES. EDITION 2021

What are currency pairs ………………………………………………… ………………..

What is currency trading …………………………………………………………………..

What is forex. ………………………………………………………………………………

How forex works ……………………………………………………………………………….

Forex in a nutshell ……………………………………………………………………………….

How is forex traded ………………………………………………………………………………

What you should know before you get on Board ……………………………………………………………………………….

Practice makes perfect ……………………………………………………………………………..

WHAT ARE CURRENCY PAIRS?

Forex is all about speculating on the fluctuating currencies between two countries. These two currencies are referred to as ‘currency pairs’ and they’re made up of the base currency and the quote currency. The most traded currency pair of all is the Euro against the US Dollar, which is normally presented as EUR/USD.

WHAT IS CURRENCY TRADING?

The term “currency trading” can mean different things. If you want to learn about how to save time and money on foreign payments and currency transfers, visit Grand Cayman Capital These articles, on the other hand, discuss currency trading as buying and selling currency on the foreign exchange (or “Forex”) market with the intent to make money, often called “speculative forex trading”.

WHAT IS FOREX?

There are many different players in the FX market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services. The main participants of trading are commercial banks, that’s why currency quotes are set at the interbank market. Apart from large commercial and central banks and multinational companies, there are also many risk-seeking investors who are always ready to engage in different sorts of speculations.

Among them are typical retail traders – individuals, who trade on the daily/weekly basis to snatch lots of money. Many of them scrutinize economic and political news, statistical releases and public engagement of influential persons to decipher the future movement of currency’s prices. Others rely on technical indicators without paying any heed to what is happening in the world of finances. You as well are able to become a Forex and join this class of currency entrepreneurs.

Forex market is decentralized. In other words, there is no physical location where investors go to trade currencies. Forex traders use the internet to check the quotes of various currency pairs from different dealers. Financial centers around the world – London, New York, Tokyo, Hong Kong and Singapore – function as anchors of trading between a wide range of different types of buyers and sellers. To obtain access to interbank currency market you will need to turn to a Forex broker.

FX trading is typically done through brokers. Brokers are companies providing individuals like you with access to the interbank market where all the trading takes place. In other words, a broker gives you a special software program, where you can see live currency quotes and are able to place orders to buy/sell currencies with just a few clicks. When you decide to stop your trade, the broker closes the position on the interbank currency market and credits your account with the gain or loss.

HOW FOREX WORKS?

The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.

Example of a Forex Trade:

The EUR/USD rate represents the number of US Dollars one Euro can purchase. If you believe that the Euro will increase in value against the US Dollar, you will buy Euros with US Dollars. If the exchange rate rises, you will sell the Euros back, making a profit. Please keep in mind that forex trading involves a high risk of loss.

The Forex market is the largest financial market on Earth. Its average daily trading volume is more than $3.2 trillion. Compare that with the New York Stock Exchange, which only has an average daily trading volume of $55 billion. In fact, if you were to put ALL of the world’s equity and futures markets together, their combined trading volume would only equal a QUARTER of the Forex market.

Why is size important? Because there are so many buyers and sellers that transaction prices are kept low. If you’re wondering how trading the Forex market is different then trading stocks, here are a few major benefits.

FOREX IN A NUTSHELL

1. Many firms don’t charge commissions – you pay only the bid/ask spreads. 2. There’s 24 hour trading – you dictate when to trade and how to trade.
3. You can trade on leverage, but this can magnify potential gains and losses.

4. You can focus on picking from a few currencies rather than from 5000 stocks.
5. Forex is accessible – you don’t need a lot of money to get started.

HOW IS FOREX TRADED?

The mechanics of a trade are virtually identical to those in other markets. The only difference is that you’re buying one currency and selling another at the same time. That’s why currencies are quoted in pairs, like EUR/USD or USD/JPY.

The exchange rate represents the purchase price between the two currencies.

Example:
The EUR/USD rate represents the number of USD one EUR can buy. If you think the Euro will increase in value against the US Dollar, you buy Euros with US Dollars. If the exchange rate rises, you sell the Euros back, and you cash in your profit. Please keep in mind that forex trading involves a high risk of loss.

WHAT YOU SHOULD KNOW BEFORE YOU GET ON BOARD.

Lately, currencies have been on a rollercoaster ride with record breaking highs and lows. The world of foreign exchange is dominating news headlines; but what does it mean, and more importantly, what do you need to know before you get on board?

First of all, it’s important that you understand that trading the Foreign Exchange market involves a high degree of risk, including the risk of losing money. Any investment in foreign exchange should involve only risk capital and you should never trade with money that you cannot afford to lose.

Know the Language

In Currency Trading, traders often use technical language that can be intimidating when you’re just starting out. As you familiarize yourself with the language, you’ll find that your understanding of Forex concepts as a whole will improve.

Technical Analysis

To develop a strategy, traders use a variety of tools and techniques. Some traders perform Technical Analysis by using Currency Charts to study the market. This technique assumes that past market movements will help predict future activity. The effectiveness of Technical Analysis makes it a very popular trading technique.

Fundamental Analysis

Other traders use Fundamental Analysis for their trading strategy. They follow the effect of economic, social and political events on currency prices. Reading specialized Forex News can help keep you in touch with the Forex community to find out how events might affect currency prices.

PRACTICE MAKES PERFECT!

Every trader makes mistakes, so it’s a good idea to familiarize yourself with a trading environment before you invest your money. To improve your trading skills, try opening a free demo trading account with a Forex company.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for everyone. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. Remember, you could sustain a loss of some or all of your initial investment, which means that you should not invest money that you cannot afford to lose. If you have any doubts, it is advisable to seek advice from an independent financial advisor.

Russel Finkelstein.