FOREX TRADING

WHAT IS FOREX

Forex(Foreign Exchange) is a global market where currencies are traded. It constitutes of buying, selling and exchange of currencies at a particular price or current price.

The forex market is the largest market as it is a $5trillion dollar a day market.

OPPORTUNITY IN FOREX

There is a big opportunity in the forex market as getting a little from what has been traded can be really profitable, and such investment cannot be seen in other kinds of investment. Trading with forex all you have to do is know when the market would go up and downand if you predict right you make profit.

For example if an information is passed that a country is going to devalue it’s currency let’s say currency B, to get more foreign investments and businesses t their country and you feel the currency is going to be devalued against another currency Currency , then you decide to sell currency B against currency . If currency B devalues against currency C then you make Profit, But if otherwise then you’ll be losing money and you should plan to leave that trade.

HOW TO TRADE FOREX

·       Open a Forex Account

·       Fund The Account

·       Place Orders-

1.    Market Orders- Here you tell your broker to take out your trade (buy/sell) at the current market price.

2.    Limit Orders- With this order you instruct your broker to execute your trade at a price that is pre-determined.

3.    Stop Orders- Here you have to execute a trade above or below the current market price to cut losses.

4.    Stop Orders- With this order you choose to execute a trade above or below the present market price to cut losses.

·       Monitor Your Trade- After placing trades, what’s remaining to do is for you to keep an eye on how your trades are going. Remember to always take profits where necessary and cut losses when needed.

   BASIC FOREX TERMINOLOGIES

Before you start trading you should know about the terminologies used in the field, knowing the terminologies is very vital as it would make you get less confused and also not make you get stuck at one point or the other.

Here are forex basic terminologies you should know;

·         Quote Currency: This is the currency you are trying to purchase.

·         Base Currency: This refers to the currency you are spending

·         Exchange Rate:  This tells you how much quote currency you need to be able to get or purchase the base currency.

·         Long Position: This refers to you wanting to buy the base currency and sell the quote currency.

·         Short Position: This means you’d like to buy the quote currency and sell the base currency.

·         Bid Price: This is the price in which your broker is willing to buy the base currency in exchange of the quote currency.

·         Ask Price: This is also known as ‘’offer price’’. It’s the price in which the broker is willing to sell the base price in exchange for the quote price.

·         Spread: The difference between the bid and asking price is known as spreading

·         Pip: This is a way in which the change of value between two currencies is known.

·         Margin: This is when the investor receives loan from the broker. This loan is equivalent to the amount of leverage the investor is taking.

Leverage: This is the amount needed by the investor to be borrowed in order to be invested, and this loan is taken from the broker.