What is Forex Trading
Forex or spot forex is the purchasing and selling of the foreign currency. In the Forex market you can sell the currency of one nation and purchase the currency of another nation.
For example, the currency of America or the USA is the dollar, the currency of Britain or the UK is the pound. In the Forex market you can purchase dollars by selling dollars or by selling pounds. Apart from dollars or pounds, there are other currencies that you can purchase and sell in the Forex market.
How to make money from the Forex market?
Currencies of various nations are continually evolving. You will find in the papers that occasionally the dollar is getting more strong against the cash, and some of the time the cash is getting more strong against the dollar. This is something opposite of the world’s currency standards. Thus, in the event that you have purchased dollars, you can sell dollars and purchase euros if the cost of euros goes facing the dollar. Once more, if the euro is solid against the dollar, you can get more dollars by selling the euro.
Perhaps you had $100 that you sold and purchased for 60 euros. He later sold the euro for $120. This way you can procure. We can make a benefit in particular if the cost raise (purchase) in the securities exchange. On the other hands in the forex market, regardless of which cash is solid or feeble, we have the chance to make a benefit in the both side which is the bright side of the forex market.
Benefits of Forex exchanging:
– In previous time, just the high class individual or the banks had the chance to exchange the Forex market. But now because of the development and expanding rivalry of different forex markets, anybody can exchange the forex market from any nation on the planet.
– It is conceivable to begin forex exchanging with only 1 dollar. Also, practically all brokers will permit you to exchange for free demos, that is, with virtual cash. So first you can set yourself up by exchanging demos for free and you can begin real exchanging by depositing the success by exchange demos.
– The extent of the Forex market is exceptionally huge and it is unimaginable to expect to control this market. The biggest financial exchange on the planet is the New York Stock Market and the size of the Forex market is multiple times bigger than that. Keep in mind, the estimation of the dollar or the euro isn’t controlled by the public authority of any nation. The estimation of the monetary forms of various nations changes as per the monetary circumstance and monetary occasions of various nations. Dollars or euros will be purchased and sold in all nations of the world at a similar cost at which you purchase dollars or euros.
– There is a huge leverage or loan facility accessible for exchanging in the Forex market, and so you can make a decent benefit from very little market development.
– Scalping is an exceptionally mainstream term in Forex. This implies open exchange for an very brief timeframe. It is conceivable to make a decent benefit with very beif change in the forex market. Numerous individuals open an exchange for 10 or 15 seconds and leave the exchange with a benefit.
– Forex market is open 24 hours every day, 5 days per week from Monday to Friday. Thus, regardless of whether you are a exchanger or a employee, you can exchange whenever it might suit you in the Forex market.
– You can do Forex exchanging sitting at home, there is no compelling reason to go out. Thus you can give a great deal of time for the family.
– To exchange the Forex market you need to do everything on the web and it is not difficult to deposit or withdraw from the account beginning from the record opening.
– If you can exchange well, many will be urged to deposit with you and all things considered you can deal with their exchange and you will get a piece of their benefit.
– Above every one of the, a successful and skilled Forex exchanger can income a great deal from this market.
It merits referencing that to be a skilled and successful exchanger, you need to concentrate a ton about the Forex market, to qualify yourself for this market. Anyoneorex market is as challenging as the stock exchange. Unknowing might be the initial achievement that the financial exchange is likewise many. However, to get by over the long haul, there is no other option except for to turn into a expert.
In other words, there is nothing of the sort as a downturn in the forex market. Since in the financial exchange you can just purchase, in the forex market you can purchase or sell both can rake in tons of cash from the forex market without knowing anything.
At the point when the stock market is going further and further down, in forex, one currency is consistently up!
What do you require to do for forex exchanging?
Are you owner of a PC or Windows Mobile with a internet connection? So enough.
How would I purchase and sell dollars or different currencies?
To exchange in Forex, first, you need to open a account with a Forex dealer and deposit in it. Accounts can be easily opened online shortly. You can right away deposit into your account with different online with various online currencies like PayPal, Alert Pay, Liberty Reserve, and so on and begin exchanging Forex.
In any case, the vast majority make deposit with forex brokers through banks. In that case, after opening the account, you will get the details of your broker’s bank account number and bank deposit.
When the deposit is succesfull in your account, you can begin exchanging. Forex exchanging is done through online software. You can download this apps for free from brokers site. After installing the apps and signing in with the username and secret key given by the broker, graphs and chart of various list will be loaded of different pairs and you will be able to open/close your exchange.
What is exchanged?
Simple answer money. Since we are not purchasing anything. So this sort of exchanging can appear to be somewhat confusing.
When we purchase a currency we are getting a few share of a nation, like purchaseing shares of an entity. The value of the cash is a reflection of the current and future economic situation of that nation.
When we purchase the Japanese yen, we purchase an share in the Japanese economy. We think the Japanese economy is improving and will keep on improving later on. When we sell those shares, ideally we will make a benefit.
In general, the exchange rate of one currency with another is a impression of the economy of that nation compared to the economy of other nation.
The currency symbol consists of three letters, where the initial two show the name of the nation and the third show the name of the currency of that nation.
For instance, on case of NZD, NZ represents New Zealand, and D represents Dollar. Simple, right?
The above currencies are the primary reason they are the most exchanged.
Buck is the nickname of USD.
USD is additionally called greenbacks, bones, Benji’s, benjamins, cheddar, paper, plunder, scrilla, cheddar, bread, moolah, dead presidents, coco, and money.
The rule of the stock market is that the cost of any share will be determined against the currency of that nation. For instance, in the stock market of our nation, the cost of a share is determined in Taka.
But in the forex market, it is impossible to estimation the value of a nations’s currency. There can be no value in euros or dollars alone. For instance 83 Bangladeshi Taka is accessible with 1 dollar. This time it is possible to get only 0.80 Euros or 0.93 Australian Dollars with 1 dollar. Again, if you talk about the Japanese yen, then with 1 dollar you can get 80 yen. So, what is the estimation of the dollar? Indivisual from different nations exchange in the Forex market, at what cost will they purchase dollars?
This is the reason everything in the Forex market is exchanged through currency pairs.
For instance, EUR/USD (EUR/USD), a money pair. At present 1 EUR/USD = 1.4434. This implies that with 1 euro you will get 1.4434 dollars. Gracious, I neglected to state, USD = United States Dollar or American Dollar. Basically, what we know as dollars.
How about we see some more currency pairs
1 AUD/USD = 1.0543, which implies that with 1 Australian dollar you will get 1.0543 US dollars.
1 GBP/USD = 1.6422, which implies that with 1 pound you will get 1.8422 USD.
1 NZD/USD = 0.8177, which implies that with 1 New Zealand dollar you will get 0.818 USD
1 USD/JPY = 80.29, which implies that with 1 dollar you will get 80.29 Japanese Yen.
1 EUR/JPY = 115.91, which implies that with 1 euro you get 115.91 Japanese Yen.
Presently you comprehend the issue of currency pair?
Brother, what if I add a little twist? I mean, you wrote that 1 EUR / USD = 1.4434 If I write USD / EUR instead of EUR / USD, is there a issue?
Of course not. But don’t forget, the first currency of a currency pair show how much currency you will get next.
1 EUR / USD = 1.4434. This means that with 1 euro you will receive 1.4434 dollars.
So, 1 USD / EUR will show the amount of Euros you will get with 1 dollar. The answer would be, just the opposite, 1 / 1.4434 or 0.698
You don’t have a small exam, I see you didn’t study anything. You can match the answers, given below this post. Be careful, answer but do not cheat!
1 EUR / GPB = 0.8708, what does that implies? If you want, you can take help from above, and you can find the solution from below.
One question remains unanswered, why are you putting so many numbers after the decimal always? For example, why write 1 EUR / USD = 1.4434? Just write 1.44. There is no adulteration of this decimal in the stock exchange, the cost of all the shares is either 20 Taka, not 80 Taka or maybe 1200 Taka. I have never heard of a share cost of 20.2543. Why so dense?
Forex Market Condition
First of all, which currency pair in the Forex market is the ratio of two currencies. For example, EUR / USD means how much dollars you receive with 1 euro. In the share market, we do not think how many shares of Meghna Cement we will get with 1 share of Janata Bank. And so, massive amount of shares in our nation’s stock market are costd in full numbers, but some are costd in decimals.
In the Forex market, it has been taken up to 4th house after decimal cause, in the Forex market, the development is usually more in 3rd and 4th house after the decimal. So it has been taken as standard
Let’s take a watch at the cost of EUR / USD in these 5 days from June 8 to June 10, 2011:
EUR / USD
Date – day maximum – day minimum
June 6, 2011 – 1.4556 – 1.4656
June 7, 2011 – 1.4564 – 1.4698
June 8, 2011 – 1.4565 – 1.4695
June 9, 2011 – 1.447 – 1.4853
June 10, 2011 – 1.4323 – 1.4551
You can notice that the market is moving in the 2nd, 3rd and 4th houses after the decimal.
[Puzzle 1 Answer: 1 EUR / GPB = 0.8708. This means that with 1 euro you get 0.8708 pounds]
Pips and pipettes
In the Forex market, a single change or developing per 4th digit after the decimal point of a currency pair is called PIP. PIPS or pips is the plural of PIP, for instance, the Market has changed 120 pips today. In other words, the market has changed 120 pips today. Many individuals call Pips a score. However, pips are widely used globally.
Massive amount of individual spend a lot of time comprehending what pips are. Let’s see if we can make it easy to learn with few examples.
You have opened your terminal (exchanging apps given by your broker). You see, EUR / USD was 1.4340 and now it is 1.4345.
How many pips have changed?
Rules for extraction: more-less = 1.4345 – 1.4340 = 0.0005
As I said before, counting pips start from number four after the decimal. Forget decimals, let’s try simple calculations
4345-4360 = 5
That is, the market has changed by 5 pips.
GBB / USD went from 1.5630 to 1.5639. How many pips did the market move?
5639-5630 = 9 pips.
Market development (EUR / USD)
Before it was 1.3450, now it is 1.3432 = 3450 – 3432 = 18 pips market development
Earlier it was 1.3450, now it is 1.3550 = 3550 – 3450 = 100 pips market development
Before it was 1.3750, now it is 1.3432 = 3650 – 3432 = 316 pips market development
Earlier it was 1.4450, now it is 1.3450 = 4450 – 3450 = 1000 pips market development
Hope you comprehend. Examine yourself:
EUR / USD used to be 1.3570, now it is 1.3550.
What number of pips did the market move?
If you can, then you are on the correct track.
You need more than karma to accomplish in the affiliate business.
The improvement in the forex market is determined with the assistance of pips. You will regularly hear that Euro / USD has expand by 200 pips today. The market is moving a great deal, it has expand by 100 pips in 5 minutes and so on.
Few brokers have 5 digits after the cost decimal. E.g. 1.42561. This fifth number is therefore pipette. So if the cost goes from 1.42561 to 1.426, then it should be understood that 10 pips 6 pipettes have expand or 108 pipettes have changed.
Lot / Volume:
The lot is a lot simpler. But when you go as a unit, it will seem complex to you. So we will not go here as a unit but try to explain it simply. See BabyPips for unit calculations.
In the forex market we can achive every pips movement. In other words, if the cost goes from 1.1710 to 1.1820, we will have a achieve or loss of 10 pips. By lot/volume we will determine the amount of benefit or loss per pips if it goes in our favor or against us.
We are dividing forex brokers into 3 parts for convenience.
Standard Lot Broker
Mini Lot Broker
Micro Lot Broker
1 lot = $ 10 / pips in standard lot broker. But in mini lot broker 1 lot = $ 1 / pips. And 10 lot = $ 1 / pips in micro lot broker.
But, if you open a exchange with many 1 many in a mini lot broker and 10 pips go in your favor, your benefit is $ 1×10 = $ 10. Even if there is a similar loss, it will be $ 10.
And, if you open a exchange with 1 lot in a micro lot broker and 10 pips go in your favor, your benefit is $ 0.1×10 = $ 1. Even if there is a similar loss, it will be $ 1.
Standard Lot Brokers:
1 standard lot = $ 10 / pips
0.1 standard lot = $ 1 / pips
0.01 Standard Lot = $ 0.10 / pips
10 standard lots = $ 100 / pips
Mini Lot Broker:
1 mini lot = $ 1 / pips
0.1 mini lot = $ 0.10 / pips
0.01 mini lot = $ 0.01 / pips
10 mini lots = $ 10 / pips
Micro Lot Brokers:
1 micro lot = $ 0.10 / pips
0.1 micro lot = $ 0.01 / pips
0.01 micro lot = $ 0.001 / pips
10 micro lots = $ 1 / pips
Definitely you comprehend the contrast between standard lot, mini lot and micro lot. Brokers adjust the lot size as per their convenience.
Massive amount of brokers will allow you to exchange a minimum of 0.01 lots. That is, you can get a minimum pip value of 10 cents at a standard lot broker. But in Mini Lot Broker you can get the minimum pip value of 1 cent. And in Micro Lot Broker you will get the minimum pip value of 0.1 cents. So if your capital is simple, you can exchange with simple risk in a mini lot or micro lot brokers.
Not only can you exchange 1 lot, 0.1 lot or 0.01 lot, you can also exchange 2.5 lot, 1.3 lot manual lots if you want.
How do I know if my broker is micro-lot, mini lot, or a standard lot?
You can exchange in micro-lots on the micro account of the exchanging score. Brokers like InstaForex, HotForex, LightForex, etc. are mini lot brokers. F.B.S., f. X. Brokers like Optimax are standard lot brokers. If you don’t have idea if your broker is a micro lot, mini lot, or standard lot, then question on the broker’s live support. Many times it is also written on their website. Or open a demo account with them and open a exchange with 1 lot. If you see that there is a benefit or loss of $ 10 per pips change, then you can comprehend that it is a standard lot broker. And if you see that $ 1 is changing, then you can comprehend that it is a mini lot broker. If you change it by 10 cents, you will comprehend that it is a micro lot broker. But some brokers have various sizes for each account type.
Forex Trading Timeframe:
Through the timeframe we can understand how much the cost has raised or decreased in a given 5 minutes, 15 minutes, 1 hour, 1 week, or 1 month. If we watch at 1 5 minute candles, we can comprehend from that:
At what cost has the candle began?
The candle is closed at any cost
cost: The highest raise in 5 minutes
cost: What was the lowest reduction in 5 minutes
The following timeframes are usually used more because they are given in Metaexchanger 4. But in Metaexchanger 5 you can use more manual timeframes.
If you see at any 1 candle of a specific timeframe, you will comprehend how the cost movement was at that time.
see at the selected candle with the red spot. Seeing this, the cost action is understood in 4 hours.
In what timeframe will I exchange?
It rely on what kind of exchange you wish to make. If you prefer scalping, you should exchange on M1, M5, or M15. If you wish to exchange normal or a little long term, you should exchange on M30, H1 or H4. If you are interested in exchanging swings or positions, you should analyze the timeframes of the week or month.
Spread, Stop Loss and Take Profit
If you open a exchange, you will see that the exchange will open with some loss. This is called a spread. Forex brokers deduct this fee as a commission or charge for opening a exchange.
Suppose you purchase GBPUSD at 1.7445, but it will open at 1.7449, which means 3 pips fee is applicable. If you open a exchange with a value of $ 1 pips, the exchange will open at a loss of $ 3.
Different pair spreads are different. Again, the spread may be more or less different brokers. For example, the spread of EURUSD on Instaforex is 3 pips. But the spread of EURUSD on Fxoptimax is 2 pips. In some pairs the spread can be up to 30 pips or more. So before exchanging unfamiliar pairs, you should watch at the spread.
Stop Loss and Take Profit
Stop loss: With a stop loss, you can decide at what cost you wish to close the exchange in your loss.
Take benefit: With take benefit, you can decide at what cost you wish to close the exchange in your benefit.
Suppose you open a purchase exchange at 1.3540. You wish to gain 50 pips and not lose more than 50 pips. Then you can set 50 pips stop loss and 50 pips take benefit. If your computer shuts down or a cost rises or falls suddenly as a result of a spike, your exchange will automatically close at a stop loss or take benefit cost.
What is the leverage in forex trading?
Leverage or margin loan is the maximum number of loans your forex broker will give you on top of your capital.
Suppose your balance or capital is $100. If you use 1: 200 leverage, your broker will lend you up to a maximum of 200 times when you exchange. Now it’s up to you how much you borrow. So, you can exchange 10×200 = 2000 dollars with 10 dollars.
Well …. if I get a loan up to 200 times, then why not take it? The stock market does not wish to give a 1: 2 loan.
Suppose you deposit $10, decide to use leverage, 1: 1, which means don’t take a loan. In that case, the broker will not allow you to open any large size exchange. With those 10 dollars, you can open as many big exchanges as you want. In that case, if the market moves 50 pips in your favor, you may gain 1 dollar. Usually different currency pairs move 100-300 pips per day.
So you thought, take a loan and open a bigger exchange so that the benefit is more. If a broker offers you 1: 200 leverage, you can exchange $2,000 with 10 if you want. And so, the benefit will be 200 times more than what it was before. Similarly, if you make full use of the 1: 200 leverage that used to be a loss, the loss will be 200 times greater. If before the market moved 50 pips in your favor, it would have made a benefit of $1, now it will make a benefit of 200.
The broker loan will give you exactly. It is better to make a benefit, in case of loss, if your loss is equal to your capital at any time, then your exchange will be closed automatically. Under no circumstances will the broker allow your exchange to run at a loss higher than the capital you have. This is called margin call in forex, forced sale in Bangladesh stock market.
Brother, this is a terrible thing! If my loss is equal to the capital to open the exchange using more leverage, will I go bankrupt or not?
Straight in Bengali words, yes! So, no matter what leverage you set, never open a exchange larger than the balance when opening a exchange. Some individual say that it is possible to double or triple the capital of Forex in one day. Of course, it is possible with luck. But if you exchange with risk like this, you will have to eat one day or the other.
Forex Trading: Currency pairs
Forex exchanging is the purchaseing and selling of one currency at a time. Currency is exchanged through any broker or dealer and in pairs.
For example Euro and EU. S. Dollar pair EUR / USD or British Pound and Japanese Yen pair GBP / JPY.
When you do Forex exchanging, you need to purchase/sell through Pair.
Suppose, on both ends of this rope, there are economic requirement of two countries. Exchange rates fluctuate depends on when a currency is strong.
Major Currency Pairs:
The following currency pairs are considered as significant currency pairs. These currency pairs are USD pairs and are exchanged instantly. These significant pairs have the highest liquidity and are the most exchanged in the globe.
Major cross-currency or minor currency pairs:
U.S. S. Currency pairs other than dollars are called cross-currency pairs or just cross pairs. The significant crosses are also known as minor currency pairs. The most-exchanged cross pairs came from – EUR, GBP, and JPY.
The pair that is added to a significant currency as a complement to another currency is called an exotic pair.
These currency pairs can be exchanged on some Forex brokers. These are not exchanged as much as the primary and cross pairs.
Exotic pairs have two or three times the spread of EUR / USD or USD / JPY. So if you wish to exchange these Exotic Pairs, think about it.
In the Forex market you will purchase or sell.
It is very easy to open exchange. The process of opening a exchange is simple and if you have experience exchanging in the stock market, you will comprehend it sooner.
Suppose you bought 10,000 euros at EUR / USD at an exchange rate of 1.1600 for $ 11,600. After two weeks, the EUR / USD exchange rate rose to 1.2500. Then if you sell it for $ 12,500 you will make a benefit of $ 600.
The exchange rate is the ratio of the cost of one currency to another. For example, the USD / CHF exchange rate indicates how much U.S. S. 1 Swiss franc can be bought for 1 dollar, or 1 U.S. S. How many Swiss francs do you need to purchase dollars?
How to read forex quotations
In each exchange you purchase one currency at a time and sell another. So the cost of currency pair in the forex market is expressed through quotations.
The foreign exchange rate of GBP / USD is as follows:
The currency before the slash (/) is called the root currency and the currency after the slash (/) is called quote currency.
Here GBP is the root currency and USD is the quote currency.
When purchaseing, the exchange rate indicates how many units of Kyoto currency you need to pay to purchase 1 unit of the root currency. For example 1.5125 U for purchaseing 1 British pound. S. You have to pay dollars.
When selling, the exchange rate indicates how many units of Kyoto currency can be obtained by selling 1 unit of the root currency. For example, if you sell 1 British pound, you get 1.5125 U.S. dollars. S. Get dollars.
The root currency is the primary basis of purchase and sell. If you purchase EUR / USD, you are purchaseing the root currency EUR while selling the Kyoto currency USD. Simply put, purchase EUR, sell USD.
You will purchase the currency pair if you believe that the root currency will be stronger than the Kyoto currency. You will sell it if you think the root currency will be weaker than the Kyoto currency.
First, you have to decide whether you will purchase or sell.
If you wish to purchase (purchase the root currency and sell Kyoto currency), it means you want the cost of root currency to go up and you will sell it at a higher cost. In the language of exchangers it is called long (long) or taking a long position. Remember, long = purchase.
If you wish to sell (sell the root currency and purchase the Kyoto currency), it means you want the cost of the root currency to go down and you will purchase it at a simpler cost. In the language of exchangers it is called short or taking a short position. Remember, short = sell.
All the forex quotations show 2 costs. Bid and Ask. In almost all cases, the bid cost is simpler than the asking cost.
The bid is a cost at which the broker wish to purchase the root currency instead of the Kyoto currency. That is, the bid is the best cost to sell.
Ask is the cost at which the broker wants to sell the root currency instead of the Kyoto currency. That is, Ask is the best cost to purchase.
The difference between the bid and ask is known as the spread.
The bid cost above the EUR / USD quote is 1.3456 and the asking cost is 1.3458.
That is, the spread here is 2 pips.
If you click the cell, you will sell at 1.3456. And if you click to purchase, you will purchase it at 1.3458.
What is a demo account? How to open a demo account?
You may be interested in exchanging Forex. But you do not know how to exchange forex. Many individual have heard of pips and leverage, but they do not comprehend anything because they have not exchanged. So you may be scared to invest in Forex in the First place. Because since you can’t do anything, the possibility of losing are high. But in this modern era, you can exchange demo without spending any actual money. For this, the brokers have arranged demo exchange. You can practice exchanging with virtual money on a demo account.
You can lose in the demo, even blow up the whole balance, no problem. It’s just to further enhance your skills. The more you exchange, the more you learn to exchange. You should not start your real exchange before you learn to exchange well. Because then you will be more likely to lose. So when you are happy with your exchanging by exchanging the demo, you should only start actual exchanging.
How long should demo exchanging be done?
The demo should be exchanged for at least 2 months. But there is no specific time.
What is the benefit if you exchange demo?
Through Demo exchanging, you can learn different Forex techniques
Able to test different exchanging strategies
You can identify the causes of your loss and correct it
You can check the effectiveness of any new EA or indicator
Overall, demo exchanging will help you in many ways to further improve your exchanging.
How to start a demo exchange?
You will need software to do a demo or real exchange. Which is called a exchanging terminal in the language of Forex? Most brokers use Metaexchanger terminals. We also need to download a Metaexchanger terminal. Open a demo account by clicking the link below and download the Metaexchanger platform.
We knew a lot about Forex. I have also opened a demo account. Now we will start exchanging. This part of article will discuss how we can close a exchange by opening it.
You will see this screen after logging into the Metaexchanger account. To open exchange in EURUSD, double click on EURUSD from the “Market Watch” window.
A window like beneath will open. If you wish to purchase EURUSD, click on “purchase”.
A exchange like below will open. The exchange will open with some losses due to the spread.
If you wish to set Stop Loss or Take benefit, double click on SL or TP.
A window will open. From there you can set stop loss and take benefit.
See Stop Loss and Take Profit set. If you go to that cost, the exchange will close alone.
The exchange is now at $ 1 benefit. Now your equity is $ 5001, but your balance is $ 5000. If you close the exchange, your balance will be $ 5001. If you go to the SL / TP cost, the exchange will close alone. But if you wish to close now, you double-click on benefit.
You will see a window will open to close the exchange. Click on the yellow close button.exchange $ 1 benefit is closed. Now your new balance is $5001.
So everything clear! GO for Forex exchanging!