| |
| |
|
WebsiteAlways |
|
The Seven Most Traded Currencies in FOREX.
Currencies are traded in dollar amounts called "lots". One lot is equal to $1,000, which controls $100,000 in currency. This is what is known as the "margin". You can control $100,000 worth of currency for only 1,000 dollars. This is what is called "High Leverage". Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency. Here are some of the common symbols used in the Forex: USD - The US Dollar There are symbols for other currencies as well, but these are the most commonly traded ones. A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible. Some of the common PAIRS are: EUR/USD Euro / US Dollar USD/JPY US Dollar / Japanese Yen GBP/USD British Pound / US Dollar USD/CAD US Dollar / Canadian Dollar AUD/USD Australian Dollar/US Dollar USD/CHF US Dollar / Swiss Franc EUR/JPY Euro / Japanese Yen The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency. If this seems confusing then you're in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues. So why is it important to know about the base/counter currency? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions. You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions. Omar Vargas; FOREX Trader and Freelance writer.
MORE RESOURCES:
Currency-Trading - Google News |
|
|
|
RELATED ARTICLES
Creativity in Trading "Is it important to be creative in your trading?"I'm not sure I can describe it in terms of importance. The creative process is somewhat of a mystery, even to scientists who study it. Advantages of Trading FOREX Over Stocks and Commodities There are many advantages to Trading FOREX as your main income generator. Let's start by something that may be worrying you already. The Yin and the Yang of Markets I am reading a fantastic book on trading, first published in 1924, by Richard D. Wyckoff, titled "How I Trade and Invest in Stocks & Bonds". The Miracle of Forex My father, who owns a small parts store and garage for vintage British sports cars, called me up recently and droned on and on about how he is getting killed by the Euro. Confused as to how the Euro could possibly be affecting his small and seemingly insignificant business, I asked him how. Discovering Turnaround Candidates There are many types of investment methodology out there. All of them has their own merits. Money Management - The Holy Grail Of Trading Money management determines how much to risk on each individual trade. This is a vital element of any trading system - risk too much and the chances of going bust are too high, risk too little and the reward for trading is too low. Two Timeless Rules in FOREX Investing RULE #1) ~ Cut your losers; let your winners ride.One important thing that every new trader must know before entering this highly profitable business is that life is not perfect, even in FOREX land, and you should always know one fact: YOU WILL HAVE LOSING TRADES. 6 Critical Factors For Successful Trading Success in any profession can be broken down into a number of critical factors. Trading is no different. Money Management, Part 1 There are some common mistakes I've seen traders make in the area of money management. First, let's understand what money management is all about. FOREX - Where Fortunes Are Made Everyday The Foreign Exchange Market - better known as FOREX - is a world wide market for buying and selling currencies. It handles a huge volume of transactions 24 hours a day, 5 days a week. Forex Trading Systems The foreign exchange currency market is the largest market in the world because it trades up to $1.9 trillion daily. Trade Entry Techniques Most traders tend to concentrate on pinpointing the perfect entry for a trade. However, in reality the entry price is just one part of the equation. How to Trade Currency We all know when you go on a trip to another country; you need to take some travelers checks and some cash in the currency of that country. This can be advantageous because one country's currency is usually worth more or less than the other. The Basics of Forex Foreign exchange market is also known as Forex or FX market. To date, it is the world's biggest "economic bazaar". Online Futures Trading - Advantages and Disadvantages What Is Online Futures Trading?A futures contract is an agreement to buy or sell a commodity at a date in the future. Everything about a futures contract is standardized except its price. Crisis of Confidence in the EU The European Union (EU) constitution was dealt a double blow, first by a French "no" vote on 29-May and then by a follow on "no" from the Netherlands on 01-Jun. To add insult to injury, one low level Italian diplomat quickly called for a referendum in Italy to decide if a return to the lira was warranted. Facts of Day Trading Are you thinking of entering the fast-paced world of day trading? Arm yourselves with the information from this fact sheet on day trading.What is day trading?Day trading is an investment tactic that does online daily stock trading with a relatively short investment. Forex Trading - Advantages and Disadvantages What is Forex Trading?Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another. This market of exchange has more daily volume, both buyers and sellers, than any other in the world. What is Forex Trading? Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another.The way it works is an investor who wishes to purchase or sell one currency for another with the hope of making a profit when the value of the currencies change in favor of the investor. Forex Trading Online - 7 Reasons Why You Should! Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways preferable to other markets such as stocks, options or traditional futures.
|
| Interesting articles | Home | site map | Link |
| © 2006 |
