Exploring the basics of Forex trading industry

Imagine lying on your couch, scrolling through Facebook on your newly bought iPhone. While scrolling, you came across an ad that said something about making money in the Forex market. It is easy as a child’s play to make money in the Forex market. they said. So, you got up and started Googling it for more information. Then you found out that the Forex market does exist in real life and in reality, it is the largest financial market in the world! 

Now don’t think we are being lame here. Many traders got into this financial platform being convinced by the news outlets and social media advertisements. But they often can’t seem to find the right way to make an entry in this platform. So, today’s piece of article is for those novice traders who hold a high passion for trading but cannot seem to find their way.

How to trade Forex?

Trading in Forex is nothing tough if you understand it properly. Anyone can join this platform with only $100 so it doesn’t require you to possess a huge amount of capital. If you have ever heard anything like that then it is a major misconception. Now the biggest of trading in the Forex market is that one needs to deal with rapid price fluctuation over a short time. So, it is inevitable that this market comes with major risk. Many traders come here thinking of making money overnight. But it is not so easy if you don’t conduct a market study and analysis to trade profitably. 

Several factors play roles in changing the currency market. The most common and most common of them is the supply and demand. Whenever the demand for any currency increases, its value increases in a currency pair. Again, factors like the budget, GDP and other economic factors play important roles in fixing the price of currency pairs in this industry.

What you need to start currency trading

If you are thinking that it takes a lot of professional equipment to start currency trading then you are not exactly right. All you need is an advanced computing device to keep a track of the market, a good internet connection to connect you to the market and good technical analysis to show you the best route to take in the market. As a new trader, open CFD account with a top broker like Saxo. By choosing an elite broker, you will get access to premium tools in an advanced trading platform. This will significantly help you to improve your trading performance.

Basic Forex terms

While walking in this market, you will have to come across many new terms and conditions that you might be never introduced to before. You cannot expect a businessman to understand all medical terms. Similarly, a doctor will not be able to decipher all the trading terms. 

So, here are some of the most common terms that you will find everywhere in the trading market.

Currency pair:

Just like the name suggest, this is a pair with two varying currency where the value of one currency increases against another. For example, the EUR/USD pair, where the Euro is the base currency whose price changes in terms with the quote currency Dollar.

Long and short:

Long and short are terms which are used to denote the position a trader takes regarding a currency pair’s price movement. If the value of a currency pair tends to go higher, traders take a long position whereas if the value goes down, traders take a short position. Traders usually refer to these terms to speculate about the movement of currency pairs.

Pip:

Pip or point in percentage is a term used to represent small changes in the exchange rate of a currency pair. You must have heard of the butterfly effect. These pips act like the butterfly effect in trading. A small change in pips can add up to a huge price difference.

Leverage

A trader needs to deal with a broker to get all the trading facilities. Brokers also provide them with leverage. Leverage means giving loans to traders for investing in their trades. Leverage is mainly counted based the amount of original capital owned by an investor.

Forex trading is a highly rated platform where investors mainly make moves based on their speculation and assumptions. So, the most important thing a trader needs here is a good technical study about the present and the past market to speculate on the future market.