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Basic Forex Terms
If you plan to engage in risky, but promising currency trading, start by learning the basics. There are certain terms and words in Forex that you need to be familiar with in order to understand the principle of effectively making buying and selling currencies. Knowing the terminology commonly used by other traders, you will feel free to learn. The following are the most important terms.
- Currency pair- This refers to two types of currencies that circulate with each other. You can use almost any currency in combination with another on Forex, but basically everyone trades in pairs involving the US dollar, the Australian and Canadian dollars, the Japanese yen, the euro, the British pound sterling and the Mexican peso. The market is always unstable, and currency prices are constantly moving relative to each other.
- Bid- Purchase price of currency.
- Ask- The selling price of the currency unit.
- Spread- The term describes the disparity of supply and demand. If you are a trader, you are forced to resort to the services of a broker who adds his spread to the value of currencies. So the broker makes a profit. Keep track of the numbers in the pair you are trading in order to get profit, not loss.
- Margin and Leverage- This is a form of collateral, allowing the trader to keep his position in the trade. How much margin you take will determine your leverage. In turn, leverage is money that you additionally manage with respect to the deposit.
- Pips- The last figure in the price of exchange. Suppose the euro is 1.3746 against the US dollar. If the selling price is 1.3749, then there was an increase of 3 pips. If the selling price is 1.4746, this is an increase of 100 points. It’s the smallest unit in the forex market.
- Stop loss- By setting a stop loss, you can minimize potential losses, regardless of the direction that the market will take. There is a regular stop loss, it remains at a predetermined level. And there is a trailing stop, moving along with your position, it protects a decent amount of profit that you have already earned.
When does the forex market open?
Many newcomers to the forex market, who have just started to learn trading, are wondering: When does the forex market open? Let's deal with this issue.
Most of the Russian-speaking traders work through dealing centers on the Internet. And each DC, as a rule, works in different time zones.
Forex trading starts at 5:00 pm on Sunday, US Eastern Time. The duduk kasus is that each DC is guided by regional time ... therefore, it’s impossible to say the exact time of opening trading in Forex!
The easiest way to find out the exact start time of trading from your DC is to look at the information on the site.
Then, you will not be 100% mistaken.
About forex strategies
Forex market today has become one of the ways to make a profit. Every trader is trying to find the most profitable forex strategies. It’s good, if such a strategy is easy to understand, it will be effective in application and will not take much time. Today, a lot of trading strategies have been developed, each with its own features, pros and cons.
The main groups of strategies are simple, scalping, channel, based on candlesticks, using the Martingale method, using indicators, using graphical models and others. Let us briefly discuss some of them.
Simple forex strategies, because they are called that they are easy to use, which can be attractive for novice traders. However, they often require a lot of time, since according to them it is necessary to wait for a favorable situation to enter the market.
Scalping (or scalping strategies) gives a quick profit from the first deals. However, a strong nervous system is needed here, as traders need to make a large number of transactions quickly. That is why the strategy is not quite suitable for beginners. It is also worth noting that within such strategies you can consistently earn money if you thoroughly examine all the nuances.
Channel trading strategies focus their attention on the so-called “channel line”. But here it is important to quickly catch and distinguish between possible false signals that need to be filtered. And the filtering process already requires certain knowledge and skills.
Strategies using graphical models imply that the price in its movement forms a certain schedule. A trader can interpret this schedule as convenient for him. In general, these strategies are simple and accessible, however, as a group of simple ones, they take time to wait for a favorable moment.
Forex strategies based on indicators represent one of the most extensive groups of strategies. Most of them use moving averages. However, there are those that are focused on more accurate signals. Can advise beginners.
In general, it is worth noting that novice traders are better off using simple strategies and strategies based on indicators. More professional players can use scalping or the use of graphic models. By the way, graphic models have proven themselves quite well lately with their efficiency.
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Basic Forex Terms
