Trade Forex

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Trade Forex with the ProsTrade Forex with the Pros

To trade forex is to buy one currency and to sellTo trade forex is to buy one currency and to sell
another currency simultaneously.another currency simultaneously.

Before We Continue…Before We Continue…
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The forex market is the largest market in the worldThe forex market is the largest market in the world
trading more than three trillion dollars every day.trading more than three trillion dollars every day.

Forex trading is considered speculative meaningForex trading is considered speculative meaning
that only a low percentage of market activitythat only a low percentage of market activity
represents companies’ and governments’represents companies’ and governments’
currency conversion needs.currency conversion needs.

Forex currency trading is also highly liquid whichForex currency trading is also highly liquid which
helps to ensure narrow spreads and pricehelps to ensure narrow spreads and price
stability.stability.

When investors trade currency, each currencyWhen investors trade currency, each currency
works against the other.works against the other.

This is due to the constant fluctuation of theThis is due to the constant fluctuation of the
market and as a result it provides numerousmarket and as a result it provides numerous
trading opportunities.trading opportunities.

In order to trade forex with the pros, you need toIn order to trade forex with the pros, you need to
understand the terms associated with forexunderstand the terms associated with forex
currency trading, also referred to as foreigncurrency trading, also referred to as foreign
currency trading.currency trading.

You will need to understand what a bid and an askYou will need to understand what a bid and an ask
are.are.

The bid is the price that you can sell currency at,The bid is the price that you can sell currency at,
and the ask is the price that you can buyand the ask is the price that you can buy
currency at.currency at.

Another term that you should be familiar with isAnother term that you should be familiar with is
the term spread.the term spread.

The spread is the difference between the bid andThe spread is the difference between the bid and
the ask, or in other words, it is the differencethe ask, or in other words, it is the difference
between the price that you can sell forexbetween the price that you can sell forex
currency at and the price that you can buy forexcurrency at and the price that you can buy forex
currency at.currency at.

The second term that you should be familiar withThe second term that you should be familiar with
is a pip.is a pip.

Pips are the smallest unit in which a cross pricePips are the smallest unit in which a cross price
quote changes and is determined by comparingquote changes and is determined by comparing
the bid and the ask price.the bid and the ask price.

To determine the pip when you trade forex, youTo determine the pip when you trade forex, you
have to know how many decimals a country’shave to know how many decimals a country’s
currency is quoted at, and then you cancel outcurrency is quoted at, and then you cancel out
the zeros on the amount you trade.the zeros on the amount you trade.

The most commonly traded foreign currencies areThe most commonly traded foreign currencies are
called the majors.called the majors.

There are five major currencies and they are listedThere are five major currencies and they are listed
below.below.

The first major currency in the U.S. dollar which isThe first major currency in the U.S. dollar which is
the world’s main currency and is the universalthe world’s main currency and is the universal
measure to determine all other currencies tradedmeasure to determine all other currencies traded
on the forex exchange.on the forex exchange.

The second foreign currency is the Euro.The second foreign currency is the Euro.

The Euro has a strong international presence andThe Euro has a strong international presence and
was designed to become the premier currencywas designed to become the premier currency
used to trade forex.used to trade forex.

The British pound is heavily traded against theThe British pound is heavily traded against the
euro and the U.S. dollar, but is not quite aseuro and the U.S. dollar, but is not quite as
strong as the previous two currencies.strong as the previous two currencies.

The British pound used to be the currency ofThe British pound used to be the currency of
choice until the end of WWII.choice until the end of WWII.

The Japanese yen is the third most traded currencyThe Japanese yen is the third most traded currency
in the world and is very liquid.in the world and is very liquid.

The Swiss franc is the only currency of a majorThe Swiss franc is the only currency of a major
European country that does not belong to theEuropean country that does not belong to the
G-7 countries or to the European MonetaryG-7 countries or to the European Monetary
Union.Union.

Unlike the stock market which takes place on aUnlike the stock market which takes place on a
central stock exchange, forex traders trade forexcentral stock exchange, forex traders trade forex
on the Foreign Exchange Market.on the Foreign Exchange Market.

They are also able to conduct trading 24-hours aThey are also able to conduct trading 24-hours a
day at whatever times works best for them.day at whatever times works best for them.

This works well for investors who may not be ableThis works well for investors who may not be able
to conduct fx trading during the day during theirto conduct fx trading during the day during their
regular work hours.regular work hours.

Forex trading is a great way for investors to makeForex trading is a great way for investors to make
money trading however, they must be sure tomoney trading however, they must be sure to
invest in their education of the forex markets asinvest in their education of the forex markets as
well as a forex trading system that works forwell as a forex trading system that works for
them.them.

Trade Forex

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