Steps To Start Trading The Foreign Exchange Market? (Part 5) - 0 views
started by Pilegaard Curry on 21 Nov 13
started by Pilegaard Curry on 21 Nov 13
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Once you see a FOREX value price, you'll see anything outlined like this:
EUR/USD 1.2210/13
Explanation:
a) If you want to BUY the EUR/USD ( meaning you BUY EUROS and SELL US$ ) you SELL 122,130 US$ and you get 100,000 EUROS, or quite simply you get
122,130 US$ for 100,000 EUROS.
B) If you desire to SELL the EUR/USD ( meaning you SELL EUROS..
What are *PIPS*??
Currencies are traded on a price/ point (pip) process. Each currency pair has its pip value.
Whenever you see a FOREX price quote, you'll see something outlined like this:
EUR/USD 1.2210/13
Explanation:
a) If you wish to BUY the EUR/USD ( meaning you BUY EUROS and SELL US$ ) you SELL 122,130 US$ and you buy 100,000 EUROS, or put simply you receive
122,130 US$ for 100,000 EUROS.
B) or in other words you receive, If you wish to SELL the EUR/USD ( meaning you SELL EUROS and BUY US$ ) you purchase 122,100 US$ and sell 100,000 EUROS 100,000 EUROS for 122,100 US$.
The difference between the bid and the ask price is called the spread. In the case above, the spread is 3 or 3 pips. Visiting black day brasil maybe provides tips you could use with your girlfriend.
Considering that the US dollar is the centerpiece of the FOREX market, it's normally considered the 'base' currency for estimates. In the "Majors", this consists of USD/JPY, USD/CHF and USD/CAD. For as a unit of $1 75000 per the 2nd currency offered in the couple these values and many others, quotes are expressed.
As an example a price of USD/CHF 1.3000 means that fore one U.S. Money you get 1.30 Swiss Francs. Going To blackfriday perhaps provides suggestions you could use with your brother. or quite simply, you obtain 1.30 Swiss Franc for each 1 US$.
If the U.S. dollar may be the base unit and a currency offer goes up, it means the dollar has appreciated in value and another currency has weakened. The dollar is stronger because more Swiss Franc will be now bought by it than before if the USD/CHF quote above increases to 1.3050.
The three exceptions to this principle will be the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these instances, you might view a offer such as EUR/USD 1.2080, meaning that for EURO you receive 1.2080 U.S. Dollars.
In these three currency sets, where in actuality the U.S. dollar is not the bottom price, a rising offer suggests a weakening dollar, because it now takes more U.S. dollars to equal one Euro, British pound or an Australian dollar.
Quite simply, in case a currency quote goes greater, that increases the value of the base currency. A lower quote means the bottom currency is weakening.
Currency sets that do not include the U.S. Money are called combination values, but the calculation is the same. As an example, a price of EUR/JPY 134.50 means that one Euro is corresponding to 134.50 Japanese yen.
HOW EXACTLY TO BUY ( going LONG )and SELL ( going SHORT ) in the FOREX Market?
Remember 2 extremely important rules:
PRINCIPLE # 1) Cut your Losing trades and allow your WINNING trades RUN
YOU'LL HAVE DROPPING POSITIONS. Every TRADER has. The secret is, a constant, disciplined investor, by the end of the afternoon, adds up more profitable trades than losing trades.
When you and see on your charts, undeniably, that you're in a losing business, don't keep losing money. The majority of the novice dealers are lowering their stop loss simply to show they are right or hoping that industry will slow. 99% of these investments, are finding yourself with increased failures. Most of the profitable investments are often "right" straight away.
Remember, smart merchants know there are many other opportunities. CUT your losses short and element those profitable positions.
PRINCIPLE 2) NEVER EVER trade FOREX without putting a Stop Loss Order.
PLACE an END order, right together with your ENTRY order, via your web trading station, to prevent failures.
Before beginning any business, you have to calculate at what level ( value) you would be wrong, as the market changed direction, and would wish to cut your losses.
A trader can enter the marketplace with a *buy position* (known as going "long") or even a *sell position* (known as going "short"), to make gains, in the FOREX.
You've been studying the EURO as an example let us assume. The EURO is paired first with the U.S. Buck or 2500.
Your trading strategies, principles, methods, etc., inform you that the EURO will rice within the next two weeks, So you buy the EUR/USD pair meaning you will simultaneously buy EUROS, and SELL dollars).
Your excellent trading station software is opened up by you (provided to you free of charge by Fenix Capital Management, LLC www.fenixcapitalmanagement.com ) and you observe that the EUR/USD set is trading at:
EUR/USD: 1.2010/1.2013
As you you think that the market value for the EUR/USD pair will increase, you'll enter a *buy position* in the market.
For example, lets say you got one lot EUR/USD at 1.2013. So long as you sell straight back the couple at a higher price, then you earn money.
To show a typical FX SELL deal, think about this situation relating to the USD/JPY currency pair:
REMEMBER Selling ("going short") the currency pair indicates promoting the first, base currency, and buying the second, quote currency. The currency pair is sold by you if you believe the base currency (83000) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).
HOW EXACTLY TO CALCULATE INCOME OR LOSS?
The Profit Calculations, on the Short-sell trade scenario below, might appear somewhat complicated if you have never held it's place in forex before, but this process is continually assessed through your broker trade place (computer software). Identify supplementary information on black friday by browsing our cogent portfolio. I show this technique to you below so you can EASILY SEE how a PROFIT may happen.
The current bid/ask value for USD/JPY is 107.50/107.54, meaning you can get $1 US for 107.54 YEN, or sell $1 US for 107.50 YEN.
Suppose you imagine that the US Dollar (83000) is overvalued contrary to the YEN (JPY). You'd sell Dollars (simultaneously getting YEN), and then wait for the exchange rate to rise, to accomplish this tactic.
Your business is the following: you sell 1 lot 83000 (US $100,000) and you buy 1 lot JPY (10,754.000 YEN). (Remember, at 0.25 dealing with a margin, your initial margin deposit because of this industry will be $ 250.)
As you predicted, USD/JPY drops to 106.50/106.54, meaning you is now able to get $1 US for $106.54 Japanese YEN or market $1 US for 106.50.
Since you are short dollars (and are extended YEN), you must now get dollars and sell back the YEN to realize any gain.
You purchase US $100,000 at the existing USD/JPY price of 106.54, and get 10,654,000 YEN. Your gain is 100,000 YEN, since you actually purchased (covered) 10,754,000 YEN.
To estimate your P&L in terms of US dollars, split 100,000 by the existing USD/JPY price of 106.54
Total revenue = US $938.61.