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Archive for the ‘Forex Trading Education’ Category

Feb
08/11
Forex Transaction Basics – Four Major Currency Pairs
Last Updated on Tuesday, 8 February 2011 10:41
Written by dustin pass
Tuesday, February 8th, 2011

Forex Transaction Basics

So on to our next topic in this Forex trading education series.  Today I want to cover some Forex transaction basics then we will discuss the four major pairs and the there trading times. This Forex Trading Education series is set up for every trader and over the next few months you can expect to see a variety of topic covered from the simplest concepts to some of the more complex strategies that are used. So lets talk about some Forex Transaction basics. First of all, before we can trade we must establish a relationship with a Forex broker by depositing funds in a margin account. A margin account allows us to leverage our money 50.1 in the US and as much as 400.1 and some international brokerage firms.  At 50.1 this means for every $1000.00 dollars we have in the market we are controlling $50,000.00 worth of currency. However, we are only responsible for our $1000. The Currency market moves in increments called PIPS (price index points). The value of a PIP is calculated buy the broker’s state of the art Dealing Station and varies from one currency to another. Currency units are divided into 100 parts. 1 pip is equal to 1/100th of a currency unit.

7 minutes later and the market has moved 15 PIP’s.

When trading on the Forex we are trading currency Lots. 1 lot represents $100,000.00 of another country’s currency. The amount of leverage available from most brokers is 50.1. Using this leverage $1000.00 will control 1 lot of any given currency. If the broker’s dealing station has valued the EUR/USD at $10 per PIP and we sell the EUR/USD than we will make $10.00 for every PIP the market goes down and lose $10 for every pip the market moves up. You may be asking yourself how we can sell something we don’t own. Brokers use terms like buy and sell to distinguish market position however they are not in the literal sense. If we enter the market selling then we are anticipating it to go down. If we enter the market buying then we anticipate the market to go up.

The Four Majors

There are many currencies available to trade (approximately 16 on most dealing platforms); however, 85% of all trading volume occurs on the following four pairs:

  • EUR/USD       (Euro/US Dollar)
  • GBP/USD       (Greater British Pound/US Dollar)
  • USD/CHF       (US Dollar/Swiss Frank)
  • USD/JPY        (US Dollar/Japanese Yen)

One of the major advantages to the Forex over comparable markets is the fact that you do not have thousands of items to choose from when selecting a trade. Therefore, you can focus your studies on a select few. This allows you to become familiar with the way a specific currency moves. Each currency pair has an average daily range and volatility level. The following is the daily average range of the four majors:

  • EUR/USD       120 Pips
  • GBP/USD       142 Pips
  • USD/CHF       150 Pips
  • USD/JPY        92 Pips

What does this mean for a trader? This means that, on average, in any given 24 hour period one can expect the specific currency combination to move within a range equal to the average daily range. We can use this information to trade by analyzing the current market movement since Midnight eastern. For example, if the EUR/USD has been trading in a range of 40 pips since midnight, it is currently 8:45AM, and the market breaks out of this range then it is a safe assumption that it will make an attempt to travel an additional 80 pips. Keep in mind that these averages can fluctuate.   So thats it for today’s post but stay tuned. My next post in this Forex Trading Education series will be on emotions which is a very important part of trading.

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Dec
31/10
Forex Trading Education – Is it really Important?
Last Updated on Friday, 31 December 2010 04:09
Written by admin
Friday, December 31st, 2010

It has indeed become crucial and vital in the recent times to understand the fundamentals of money exchange before venturing into this market. This puts much emphasis on acquiring what is an essential Forex trading education. This may seem like a daunting task, and ask for a great degree of perseverance and dedication, but such an education is a tool that will remain with you for the lifetime.

Forex indeed is the largest and most volatile financial market around the globe where things change in a matter of seconds. Many may debate that it is all but a game of luck and chance; how wrong they are! The success in this market banks highly on the ability of the trader to predict and forecast the future movements by understanding the past and current trends. This precision and analytical thinking can only be built through Forex trading education.

Why is it Crucial??

Some may think of Forex trading as a piece of cake; after all what’s the big deal in buying and selling currencies and making some bucks out of it. I wish it was that simple! The making bucks, or let’s say profits, is the core purpose of the deal, yet it is something that is hard to make. Determining the right time to purchase or sell the currencies to get some so-much-wanted profit is all that this market revolves around. Great instincts and good Forex trading education are only a few of  the tools necessary to ascertain when to buy and sell currencies, how to make the most of the opportunities, and when to pull-out from the market.

Advantages of Forex Trading Education

There are several options when looking for a Forex trading education. You may either join a class locally, or learn it online from the comfort of your home. Whichever way you opt for, having Forex trading education will endow upon you a great advantage in handling the foreign trading task with ease and prudence. You will have an edge over those who rely on their instincts alone to make crucial trading decisions.

Many  courses provide detailed information about several terms used in the market and various options available to a trader to manage losses. Also, it will help you analyze the historical market trends so that you can avoid the mistakes already made by other traders, so as to avoid any losses.

Forex trading education can instill us with the insight required to understand the market mechanics, functions of software, chart reading and trading opportunities, and provide you several advanced skills that will prove to be very handy in trading. With the tactics to understand the market trends, and an insight to forecast the future events, you can get a strong hold of the market that may assist you in minimizing your losses and gain great profits. We have put together a fantastic education course that is available for free. Click here to get more information about the Forex training program we have made available at no cost.

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