Forex trading is essentially the buying of one currency and the simultaneous selling of another. Therefore when trading currency pairs we will always see them quoted in pairs. When placing a trade we are speculating on which currency we believe will become stronger or weaker against the other with the goal of making a profit from the exchange rate movement. The currency to the left is called the base currency. The currency to the right is called the quote the currency. The quote currency tells us how much it is worth against 1 unit of the base currency. So if…
Author: kent
kent
Kent has extensive experience in the forex industry. He has an in-depth knowledge of the financial markets and is a regular contributor to our site.
When it comes to forex trading, it can be tempting to hit the market running with an unsustainable amount of energy. After all, the overlapping trading sessions mean it’s technically possible to trade all day long, five days a week. The problem is, this can lead to poor decision making and a trading burnout. Moreover, not every second of the day will be profitable. So, what is the best time to trade forex? And when should you take a break from reading charts and analysing trading data? Let’s take a closer look. The four main trading sessions explained The four…
Trading in the forex market is a relatively straightforward endeavor that simply involves exchanging one currency for another. Furthermore, the recent availability of online forex brokers makes executing a forex trade for someone who already has an Internet connection as easy as downloading free forex trading platform software, opening and funding an account with an online forex broker with as little as $100, entering their desired trade details, and then hitting a button to execute the trade. Since such forex deals are typically done on a margin basis, the advantage of the high leverage available in the retail forex market…
Knowing and understanding the proper terminology within the forex market is essential in becoming a successful trader. In this article we discuss and define what pips, lots, margin and leverage are. We also provide examples of each for easier comprehension. Pips and Lots Currency traders quote the value of a currency pair, and trade sizes, in pips and lots. A pip is usually the smallest amount by which the value of a currency pair can change, although these days some brokers offer fractional pip quotes too. In example, when the value of the EUR/USD pair goes up by one tick…
Prior to 1971 an agreement called the Bretton Woods Agreement prevented speculation in the currency markets. The Bretton Woods Agreement was set up in 1945 with the aim of stabilizing international currencies and preventing money fleeing across nations. This agreement fixed all national currencies against the dollar and set the dollar at a rate of $35 per ounce of gold. Prior to this agreement the gold exchange standard had been used since 1876. The gold standard used gold to back each currency and thus prevented kings and rulers from arbitrarily debasing money and triggering inflation. Institutions like the Federal Reserve…
Forex trading involves transactions in which one party purchases a quantity of one currency by paying in a quantity of another currency. The Forex market is a global decentralized financial market for the exchange of currencies. Around the world various financial centres act as hubs for trading between a wide range of different types of buyers and sellers 24 hours a day, except weekends. It is the foreign exchange market that determines the value of one country’s currency relative to another. The primary reason the Forex market exists is to facilitate international trade and investment by giving businesses the ability…