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2 step - basic concepts of Forex market: quotes, currency pairs, item, lot, spread
When logged into the program, you see four windows, each of which corresponds to one of four major currency pairs on the Forex market.

Currencies that more often are used for trading:
1.USD - U.S. Dollar
2.EUR - Euro
3.JPY - Japanese Yen
4.CHF - Swiss franc
5.GBP - British Pound

Trade takes one currency against another. All the pairs directly or indirectly linked to the dollar.

Major currency pairs for trading on the Forex market:
1. EUR / USD
2. GBP / USD
3. USD / CHF
4. USD / JPY

Types of quotes on Forex market

1) Pairs USD / CHF and USD / JPY - pairs with a direct quotation. Show dollar price against Swiss franc or Japanese yen, respectively.
2) Pairs EUR / USD and GBP / USD - pairs of reciprocal rate. They show euro and pound sterling prices against U.S. dollar.
3) Cross rate - those pairs that do not have dollar. In fact, it is, but indirectly.
For example, EUR / GBP. It seems to consist of two pairs: EUR / USD: GBP / USD.
Currencies EUR and GBP usually go in one direction. Trend on such a pair, as EUR / GBP will be determined depending which currency EUR or GBP will rise or fall faster.

Go to the next concept on Forex market. If we take a look at the chart EUR / USD, we will see a current price: 1.1234 (4 decimal places) on the y axis.
If we take a look at the chart USD / JPY, we will see 1.12 (2 decimal places).

Point - is the minimum value, which can vary the price of one currency relative to another.
For pair EUR / USD it is 0,0001
For pair USD / JPY it is 0,01
This is evident from the number of decimal places, as described above.

We proceed to the next concept on Forex market.
Spread - the difference between the buying and selling currencies prices. You can see that the buying and selling prices differ among themselves on 1-3 points.
For example: buy (to buy) = 1.1012
sell (to sell) = 1.1010
In this example, the difference is 2 points - these 2 points takes a foreign exchange broker for giving you the opportunity to trade.
You can see this as well on the opened orders as soon as you open an order, you see that you are 2 points minus.

Next term is lot.
Lot - the amount of money for any transaction on Forex market. For example, 1 lot = $ 10. If you entered with one lot, then when a price changes of 1 point, your profit will increase or decrease by $ 10.
Of course, for us it is too early to work with such sum of money. We can be quite satisfied to go with 0,1 lot, in this case 1 point would be equal $ 1. If you consider that each currency takes about 100 points a day, your potential profit may be $ 100 per day.

Category: Step 2 - basic concepts of Forex market | Added by: Наталья (01.06.2010)
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Step 1 of Forex strategy - software on the Forex market
Software on the Forex market, account, brokers, metatrader
Step 2 - basic concepts of Forex market
Basic concepts of Forex market: quotes, currency pairs, item, lot, spread
Step 3 - types of transactions, trend, bulls, bears
Types of transactions, trend, bulls, bears
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