Forex - An Understanding

Generally speaking, Forex currency trading is a simultaneous act of selling or buying one for the other in context of two different correlated currencies; when you buy you sell also, or when you sell you buy also. Polishing the view, let's say - Buy when the price is low or down and sell when the price is high or up. Leave Money which is losing the charm and welcome the Money that is hot. This is a simple doctrine for trading currencies and earning profits. It is always expected that you buy or sell a currency on account of an assumption and anticipation. If not at present but in the future, you think, a currency is going to overtake or uplift further against some other currency, you need to buy the former for the latter or sell latter for the former. The quantity of buying and selling depends on how much gain you want to target in accordance with your ability, awareness, and risk taking behavior. For example, your anticipation suggests that in a near future EUR (Euro) will strengthen its position against USD (US dollar), at present, you are supposed to buy EUR for USD or sell USD for EUR (USD will weaken against EUR as per your anticipation); and the vise-versa when your anticipation comes correct in the future. If this assumption proves to be wrong and the market goes against your anticipation, you lose.
Forex currency trading is stated to be the best because of its over-the-counter (OTC) feature. Anybody can trade with anybody, straight forward, 24 hours a day, worldwide. There is no control of a Central Exchange over the market. Moreover, this market is free from any external power of any group or individual; because of its size such factors can never succeed to influence the market for personal interest. This market is also featured for its "liquidity" with the highest amount of trading per day as compared with the other financial markets in the world. It is liquid (flowing or runny) because there are buyers and sellers all the time all over the world with the fluctuating rates of the currencies; opening and closing of trading positions is a matter of few seconds. The term "fluctuation" refers to the frequently changing (within minutes or even seconds) prices of the currencies.
The participants are the only doers who will decide what to be the price of a particular currency against another specific currency, all depending upon the over all values of those currencies. These values may be as a result of "happenings" either within the market itself or within the nation of a subjective currency. These two situations refers to two investment strategies, respectively, the Technical Analysis and Fundamental Analysis.
Marginal trading is a biggest plus point of Forex. This makes it more easy, especially for small investors, to trade for bigger position with a much smaller actual amount of capital in their accounts. For instance, you can trade for $100,000 by just investing $500 as a "real money" supply. The money representing your bigger position in marginal trading is called Leverage; and the initial required smaller amount of transaction in your account is called the Margin. However, as there is a significant risk of money loss involved, and this may require an expertise, high marginal trading or leverage is not recommended.
Remember, Forex market with varied participants and universal size bestows you with an "equal opportunity" for gaining profits along with others located all over the world.
Watch out for my upcoming articles on Forex. Also, please visit the links shown within the article and my previous article on Forex.
http://ofandforfxtrading.blogspot.com

Why Start Trading Forex?

Are you new to forex trading? It is very simple. To start forex trading, we have to know what forex is. Forex trading means selling and buying different currencies of the world. The biggest and fastest growing market is the currency trading market. A forex deal is made when you buy and sell a currency at the same time. More than $2.5 trillion is the daily turnover. Just as goods are traded in markets, currencies are traded in forex trading market. The currencies of various countries are the "Goods" in forex markets. For example you can buy Japanese Yen with US Dollars or you can sell Euro for Canadian Dollars. It is as simple as trading one currency for another. Due to strict financial regulations individual traders were not allowed to do business in the forex market. Only from the year 1998 was forex trading made available for the public. Now the players in this market are institutional investors, central and commercial banks, hedge funds, corporations and private individuals
Forex quotes are the first thing you have to learn when you start trading. The quotes are always listed in pairs (e.g. AUD/CAD 101.2): the first listed currency is the base currency with a constant value of 1 unit; while the second currency listed is known as counter. If you are a forex novice, then it is worthwhile to play it safe. You should stick yourself to trading with only one currency pair. Once you get used to the system, try expanding your trading. You can be more risk-taking and adventurous. In the example given above, AUD/CAD 101.2 means a dollar of Australian dollar is equal to 101.2 Canadian dollars. That means, the quote shows the relative value of one currency when compared to the other. It implies that the value of AUD had been increased when AUD/CAD quote goes up.
Every quote has two sides, 'bidding' and 'asking'. The profit lies in the differences of 'bid & ask' price. For example JPY/USD 1.2433/1.2441; the 'bid' price is the price at which you sell the base currency; while the 'ask' price is where you buy the base currency. "Spread" is the difference of 'bid & ask'. In the example of JPY/USD 1.2433/1.2441, this means you can buy 1 Japanese Yen with 1.2441 USD or sell 1 Japanese Yen 1.2433. The US dollar, Euro, Canadian dollar, British pound, Japanese yen, Australian dollar, and Swiss Franc are the seven major currencies traded. The most traded currency is the US dollar. If you happen to live in one of these countries it is better to start trading in that currency. It is because you will be in a better position to analyze its strength. To conclude, forex trading is claimed as "The World's Most Powerful Home-based Business". New investors should take time to learn this skill well, attend seminars, do paper work, read books and practice everything with a demo account before you consider trading with your own money. Forex trading is a long term solid way to make money and good profits.
Was this useful or what?! Really, Forex, is one of the best ways to create a solid income. If you want to learn more about Forex and some great tools to automate the process, feel free to visit us at: ForexSystemReport I'm Lance Giroux. Forex system Report ™ Senior Advisor.

Alternative Route - FOREX

Foreign exchange or more commonly known as FOREX is the largest mode of trading involving banks, traders, government bodies and traders around the world. With the presence of multiple parties, currency of different countries can be traded between countries and organizations. With varying currency rates happening everyday, there are those who gain and lose value on a certain currency.
Foreign exchange relies on not only the buying and selling of currencies, but also the exchange rates that vary daily. Buying them at a lower price then selling them at a higher price means profit made. Exchange rates are affected by factors such as political factors, economical factors, market patterns, and other factors that of a country. A country's currency is valued to a standard global trading currency, then US Dollar, because it is stable and has a strong currency value.
There are a few levels of participation in foreign exchange where inter bank trading being the highest of them all. Interbank foreign currency exchange involves large sum of money to be traded daily so that the bank will gain profit form the exchange. When we look at FOREX trading in another level, companies or firms take advantage of foreign exchange to trade for products, but in a smaller scale compared to interbank trading.
Individuals are also able to participate in FOREX trading via a few methods. One can be directly or indirectly participating in foreign exchange trading via Hedge Funds, FOREX investment companies, or brokers who offer the foreign exchange services. It is another way of doing investment and with the help of speculators in investment companies that help individuals to trade smartly, FOREX is just another good alternative to invest apart from many other current markets.
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10 Rules For Successful Forex Software Trading

1. Use stop losses - A successful forex trader always limits their losses. No matter how good you are at timing the market, regardless of the strategy being used, every forex trader will lose from time to time. The key is to minimize the losses through properly placed stop losses and learn to maximize your gains.
2. Develop good trading strategies - I do not recommend using a demo account to test your strategy but do suggest starting with a really low amount of capital in a good forex trading platform. The reason I do not suggest testing your forex software trading strategy in a demo account is because of the difference between actual and fake trading. I have seen traders rely on what they learned form a demo account only to lose consistently through an actual account. I strongly believe that a small $50 start up account can be much more helpful and a great test of a forex software trading strategy. To find a proven set of forex trading strategies click on the link at the bottom of the page.
3. Learn how to interpret the news - This is a learned skill and to do so successfully you must take your time and become comfortable with these patterns. Once you learn to interpret the news you will be glad that you did, great profits can be made learning to interpret the news.
4. Start trading small - As mentioned previously, the successful forex traders learn from mistakes made when they trade small. Do as they do and you will learn to trade successfully.
5. Never allow a gain to turn into a loss - One of my personally big rules never to be violated. If you have entered into a trade and are on the upside make sure you have a stop in place to preserve your gain. Nothing brings down a trader faster than a gain turned into a loss.
6. Learn from your mistakes - The old saying is very true as it applies to the world of forex software trading, "If you do not learn from your mistakes you are bound to repeat them." Enough said!
7. Learn to walk away from trading for a time if not doing well - I have personally made the mistake of falling into the "I'll make the money back" mentality. This is a loser's mental state not a successful trader's psyche. If things are just not going well do not allow greed or fear to keep you in the forex market. There will always be tons of opportunities and you need to have your head on straight when trading so do not be afraid to walk away for a time.
8. Trade with knowledge not emotion - Do what you know you ned to do rather than what "feels right." Stay with your strategy and do not deviate. If you trade with your emotions you will never succeed, period!
9. Trade with money you can only afford to lose - This really should be rule number one. If you violate this rule you will not be able to trade objectively or effectively.
10. Use a good trading platform - This is the one rule that is most easily pushed aside. Not choosing the best forex software trading platform is just like flushing money down the drain.
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Forex Trading - Why Cheap Expert Advisors May End Up Costing You in the Long Run

If that headline caught your attention then you are either about to get into Forex Trading or you've already been burned by using a cheap Expert Advisor that didn't make you as much money as you expected -- or worse, ended up losing you money.
If you're not up to speed on Expert Advisors (EA), then are simply pieces of software designed to monitor and make trades on the Forex currency markets. In their simplest setup, you link the EA software with a live trading account. Based on market history, it makes buy/sell orders when the trend indicates the currency pair is about to move in a particular direction, with a view to making money from that trade. Many of these products are sold as allowing you to make money without any human intervention.
And although this is certainly possible for someone who properly uses the system and has some good Forex knowledge as a base, such systems can end up costing you money as well. In most situations this is because of insufficient market knowledge -- people diving straight into the deep end and making mistakes that a more mature investor would manage to avoid.
The reason for these mistakes? Quite simply, the people that buy these software systems are often left on their own once the product is brought. They have no-one watching the market for them, making them aware of daily changes in the market, nor warning when they should exit the market and stay out for a few days due to unpredictable market volatility.
To properly make serious money in Forex trading you need support. There is no point trying to be the tough guy or girl here -- after all, this is yours and your family's futures at stake. Up until now it has been hard to find a product that gave the support needed to those who are serious about making their living through online currency trading.
Thankfully the market has changed and we are starting to see products that give the support needed. Although they cost a little more than the cheap systems, the huge amount of support provided means that any initial difference in outlay is likely to be repaid very quickly through increased profits.
One such product is the Forex Brotherhood - a community of serious Forex Traders like you coming together in order to get the most profits possible. Guided by a 20 year foreign currency trading veteran who presents two live daily market updates via the web, the Forex Brotherhood unlocks the key to daily reports, member-only live online trading forums and the chance to seek as much support as necessary in order to get the most profit out of your online currency trading. Limited to just 1000 members, you can find out more about the product here - http://forex-trading-systems-4-you.com/forexbrotherhood

The Forex Trading Tip That Will Make You Rich!

If you are a new forex trader or an experienced one, what I am about to tell you is going to make you rich. This is a tip that will change the way you trade forex forever!
The tip that is going to make you rich while trading forex is...use an expert advisor! Now you are probably wondering what an expert advisor actually is. Well to put it plain and simple it is a special term for a robot. This robot is programmed to run inside your forex trading software and to buy and sell for you on autopilot.
Now you are probably asking yourself how this great tip is going to make you rich, let me explain. The forex markets are open 24 hours a day, five days a week Monday through Friday. If you had a robot running all that time for you buying and selling when the prices are right, do you know how much money you could be making? Let me give you a hint...it's easily in the five figure range!
One forex expert advisor called the Forex Tracer ran some tests on practice accounts to see how well it worked. To the surprise of the makers of the software, it made $18,000 in just nine days and it didn't stop there. On another practice account the Forex Tracer earned a total of $335,000 in one year...that is an amount of money that high paying executives make!
So as you can see, using a forex expert advisor is the true key to striking it rich forex trading. There is no easier way to make money on complete autopilot as it is to drag and drop a forex robot file into your trading software and let it run.
I hope you found my forex trading tip helpful and I wish you the best success in your trading!
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Forex Starter Guide - Part 1 - Making First Steps

Most people who visit Internet have heard about Forex at least once. There's truly a whole lot of information about it that came out last years. Forex means the Foreign Exchange market - and it's really huge - about 3 trillions of dollars is exchanged daily on the planet! This number is often used in ads, and usually sounds like "it's very big sum of money so it's very easy to take a little piece of it". Well, that's not true, that's just a marketing trick and nothing more. Without the proper knowledge and trading skills you won't get any profits at all, you'll just lose your money. So it all comes down to your skills. But how to get these skills? Where to start? In this article I'll give you basic steps.
As a forex starter you should know the basic terminology. That's where that forex beginner tutorials are really helpful for you! There are literally hundreds of them in the Internet and many are free. Just pick one or two and read them carefully. Many forex starters just don't begin their trading. They keep consuming and absorbing information while their trading experience is almost zero. I recommend to study your first tutorial for some time but then begin your practical steps in forex trading.
Many tutorials and guides recommend Forex Starters to begin with mini trading accounts and practice trading with them a little bit. I agree with that point. Learn technical and fundamental analysis basics, begin to study forex indicators, pick yourself a currency cross and then just make some trial deals. Buy, sell and see what happens. Try to experiment with different currencies, charts, indicators etc. After you feel yourself comfortable with your trading platform, you need to pick yourself a trading strategy.
There are a lot of trading strategies offered to the public today. My advice is: don't make things complicated, just pick some free simple trading strategy and try it on your demo account. Remember: only result matters, not the complexity of the system. If it's too difficult, you'll fail in mastering it and won't make any profit. So my advice for your first trading system is: as simple as possible.
Ok, so what now? Testing. You need to test your strategy and, if it doesn't prove itself, pick another one. A lot of traders recommend to test on paper or on demo accounts, while other say mini-forex is best for this purposes. I think that if you can put several hundred dollars into your first mini-account, just do it - believe me, the Real Money trading experience is totally different from paper/demo for the Forex Starter. A lot of Forex Starters did well on demo but failed after opening a real account so it's better for you just to get used to real money. But don't make your initial deposit too high, it'll make no difference for your trade learning. My advice for the first mini-account is two hundred - one thousand dollars, that will be quite enough.
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Forex Avenger - Automated Forex Trading System

Forex Avenger was consist of 10 videos and 1 PDF report explaining everything for your reference. This automated forex trading system gives you a trading system that will show you the right way to place your trade. Forex Avenger is different because the system is so simple and yet so powerful. The system also withstand any market condition.
Automated systems allow you to pick up a currency and record the asking and selling price. All that's required are funds in your account because your buy and sell orders would be executed instantly. Automatic and automated forex trading systems spa and NYC tool that lets you specify a currency, an asking price, and a selling price beforehand. With a small seed amount and with the help of a broker, your purchase and sell orders will be executed instantly.
Automated or automatic Forex trading involves the use of a trading program that places trades for you without requiring any intervention. Automatic Forex trading systems are often sought out by individuals that wish to benefit from trading the Forex market without it being a full time job.
Online Forex brokers offer mini and micro trading accounts, some with a minimum account deposit of $300 or less. Now we're not saying you should open an account with the bare minimum but it does makes Forex much more accessible to the average poorer individual who doesn't have a lot of start-up trading capital. Online Mini-FX accounts, which can typically be opened with as little as $300, offer 0.5% margin, meaning that $50 in trading capital can control a 10,000 unit currency position. This is another reason why people use forex trading online as a way to make highly leveraged investments.
Forex Avenger can nail trade after trade with unheard 82.69% accuracy.
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E-currency Trading - A Great Investment System

Many people today feel like they don't have enough money in their lives. These days having only one stream of income isn't enough. People are always looking for more. Life is getting expensive. People want to be able to go out and do what they want, take vacations, have fun, and in general enjoy life. The problem is that they usually don't have enough money or time to enjoy these things. This is where E-Currency Trading comes in.
Finding the solution to this problem is not easy. Most people fail when they start their own business. Most people will never see the light when it comes to building a successful online business. It's just not something that can be done, it takes money, time and a lot of effort to put together something that will work and bring you profits all the time.
What most people don't realize though is that it is possible to find a profitable business. You too can have a business online that generates a lot of income for you every month. And with the right knowledge you can manage it and make it very successful without you sacrificing your entire life in return for money. You could someday say "no more living hard, barbecues everyday, do what you want any day"
Living your dreams is what life is all about. Having a lot of money is one of the main keys to living the reality you want. The moment you own a successful business your life becomes much better in term of quality. One business opportunity that has constantly reported to change people lives is E-Currency Trading. The success ratio in this business is so high mainly because it's so easy to do, requires very little time, and you can get started with as little as a couple hundred dollars. This combined with the fact that you don't really need any special skills, it's what is making such a hot opportunity on the online world.
If you've been having a hard time keeping up with your bills, you feel like you want more money, or you feel you need to grab a hold of your life, then I recommend checking out E-Currency Trading.
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Setting Yourself Up For Futures Trading

I've noticed that many people new to trading are a bit confused about the mechanics of setting up and funding a trading account with a broker. You needn't be, if you can manage internet banking, then establishing and operating a trading brokerage account is a snip.
The first step is to find your broker. As a trader, you are looking for an efficient electronic platform that lets you manage your account and trading activity interactively over the internet. A few things to look for include:

• Low cost of execution for the contracts you intend to trade. Prices are either quoted as a "round trip" or "per side". As a future trade involves two separate transactions - Buy to open, Sell to close, or vice versa - a "round trip" price covers both sides. If you see an advertisement for $5 per side, you know that a trade will cost you $10.

• Fast execution of the orders you enter. By "fast" I mean virtually instant execution of market orders. The trading platform must provide a direct electronic interface to the market. Do not entertain any two stage system where orders are submitted to brokers who then submit them to the exchange.

• Support for all common order types. At the very least, you should be able to enter market, stop and limit orders. If you don't want to be tied to the screen for the full session, you should have orders such as "one cancels other" or "one triggers other" available, so that your strategy can be automated.

• A chart is the trader's basic tool for analysis and good brokers supply excellent packages as part of their offering. You should be able to display market information in multiple formats and time frames. The package must support the display of common indicators and studies on the charts.

• Real time data feeds are vital to the day trader. You should be able to watch your charts updating on your screen in real time. You should also be able to see "market depth" information. (This shows the number of orders resting in the market at various bid/ask levels.) In general, there is a monthly charge for this service, which is often waived if you make a certain number of transactions.

• Access to international markets. The move to electronic markets has enabled brokers to provide direct interfaces with exchanges around the world. As well as the US Markets, you want to be able to trade European and Asian markets. This is particularly important for non-US based investors.

• 24-hour support service is essential. Most of the time you will never need to contact your broker by phone, conducting all your normal trading activities via the internet. But if something does go amiss, you want to know that there is somebody available to fix your problem immediately. In fast moving markets, time can be of the essence.

• Last, but not least, it is useful if your trading platform allows you to trade futures options as well as pure futures contracts. As your trading develops, you may want to utilize option strategies and it is frustrating if that means you have to change your broker.

During my career I have used two futures brokers - Xpresstrade and Interactive Brokers. Both provided excellent service. Xpresstrade uses a browser based trading platform which means that you do not have to download any special software onto your computer. I found it simple to use, with powerful features, and the support was first class.
Interactive Brokers (IB) is my current broker and I am delighted with their offering. Everything is automated, and there are a multitude of different facilities available on their trading platform. For example, orders can be entered through a conventional order entry screen, directly from a "book trader" screen, or by using graphic tools directly on the charts.
IB has excellent support services. However, they cater for the knowledgable trader and are not into "hand holding" support. A beginner may find their interface more confusing than some others, like Xpresstrade.
As an indication of prices you can expect, Xpresstrade charges $5 per side for common electronic contracts; IB charges $2.40. Both offer discount structures for volume traders.
As I type this I am following the Corn market at the Chicago Board of Trade. Click here to see my simple trading screen.
I have two windows open. On the right is the charting window set to follow the session using 2 minute candlestick bars, with volume shown along the bottom. It is easy to display studies, or draw trend lines on the chart.
To the left is the "book trader" window which displays market depth at various price levels, and permits one click entry of all common order types. For example, left clicking a particular price level enters a Limit order, and a right click enters a stop order. Buy/Sell buttons at the top of the screen enter immediate Market orders.
This is a great setup for day trading. Screens are easy to customize; so each trader can have their own setup, according to personal preference and the tools they like to use.
I have noticed that new non-US traders sometimes feel reluctant to open accounts with US brokerage firms. Naturally they feel more comfortable and "connected" working with a brokerage based in their own country.
But I advise you to think internationally in this business. The US futures markets are big and the industry servicing them is well established and sophisticated. Look for the "best" brokerage, not necessarily a local one. Remember that your interaction will be totally web based, so it really doesn't matter where their office is.
Another fear I have heard expressed by new offshore traders is that their money is not secure, or may be difficult to access. All that I can say is that in over ten years trading experience I have found depositing and withdrawing funds to be simplicity itself, and absolutely reliable. US futures brokers are strictly regulated, maybe better regulated than brokers in your own country.
The best brokers provide facilities on their website which completely automates the account application process. Be prepared to spend a bit of time on this because because there are several documents to be read and completed. It can be a bit intimidating the first time you do it; there is a lot of boilerplate ensuring that you understand the nature of various risks involved. You are also asked questions about your assets and prior trading experience. It is important to read this material carefully, but avoid becoming too discouraged by all the legal language - the brokerages need to advise you of all worst case scenarios and, naturally enough, ensure that they can not be held responsible for losses incurred during normal trading activities.
Quite soon after submitting your application form you will (hopefully) be advised by email of your account acceptance and provided with details including User Id and Password. Login and change the password as soon as possible.
An offshore trader using a US brokerage has a couple of extra steps to go through. You must fax (or email scanned copies of) your passport and a utility bill to comply with stricter security regulations since 9/11. You will also be asked to fill in a W-8 form for tax purposes. If you have no other business activity in the U.S. and live in a country which has reciprocal tax agreements, completion of this form means that the brokerage does not have to withhold a percentage of profits for taxation purposes. This simplifies matters, because you only need to declare income and pay taxes in your own country.
Once you have a user account and password, you can log into your account. At this point you need to fund it. This is normally done by a standard electronic funds transfer. Offshore traders may need to wire funds, but this is a simple thing to arrange from your bank branch. (In my case, Interactive Brokers provide the facility to deposit funds using the standard Australian funds transfer system which is easily done via internet banking.When the funds arrive in your account, it is activated and you can view your balance on the screen. When you trade, the balance is updated in real time.
Normally there is a facility on the secure web site to set up details of your bank account. Having done this once, you can withdraw funds whenever you wish with just a few clicks of your mouse.
That is all there is to it. Following these few simple steps sets you up with a brokerage account providing access to markets throughout the world, with software facilities which were once the exclusive province of large investment houses.
Now you are ready to start playing the trading game!
David Bennett is an independent Futures Trader. He lives on the Gold Coast of Australia, trading financial and grains futures contracts in Chicago.
Visit http://12oclocktrades.com for more articles.

Courses In Currency Trading - Your Education Is First

If you are a novice in foreign currency trading or simply want to brush up on your skills, there are a number of courses in offered by schools, finance and currency trading companies. Some courses are even offered online and one can be comfortable in the trade in a matter of a few days or a few weeks by just enrolling online and being diligent in following the lessons offered online.
Courses in currency trading range from the very basic catering to those who are just starting to the more advanced courses intended as a review or brush up course to those who already have basic knowledge in currency trade. The courses offered are usually designed to provided an overview of the foreign exchange (forex or FX) market and enables students to acquire skills such as reading FX quotes, understanding and applying trading on the margin, reading and using technical analyses, and perhaps, other advanced topics. This will enable someone to confidently engage in the foreign currency trading business, identify market trends and opportunities, act on them, and do a successful trade.
The price of courses in currency trading range from free to the expensive. Free courses are usually in the form of self-paced demos or tutorials, which usually gives an overview of foreign exchange trading. Upon completion of such introductory courses and if it leaves you interested, you may yearn for more knowledge and decide to enroll in the more advanced, more intensive courses. The more expensive courses sometimes would feature one-on-one guidance with experts, 24x7 online support, free books, free software, CD's and other references.
If you are going to invest in courses in currency trading, you should look for programs that would give the most value to your money. Compare providers of courses and see what they offer. Also ask around fellow students and see what others' experience had and what they have to say. Lastly, once you have made the decision and made the investment, you should take full advantage of it and make use of all the support being offered by the training program. This way, you do not throw away your money, and you are on your way to achieving your dream of becoming a foreign currency trader.
For more information about Courses In Currency Trading, feel free to visit us at: http://www.currency-trading-zone.com/Courses-In-Currency-Trading.html

Currency Trading: Understanding the Basics of Currency Trading

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.
What is traded in the Forex market?
The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:
EUR/USD: Euro

GBP/USD: Pound

USD/CAD: Canadian dollar

USD/JPY: Yen

USD/CHF: Swiss franc

AUD/USD: Aussie
These currency pairs generate up to 85% of the overall volume generated in the Forex market.
So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.
The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.
Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.
If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.
Bid/Ask Spread
All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.
EUR/USD 1.2545/48 or 1.2545/8

The bid price is 1.2545

The ask price is 1.2548
A Pip
A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.
Margin Trading (leverage)
In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.
The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.
The standard lot size in the Forex market is $100,000 USD.
For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.
To open such position, he or she requires 1% in balance or $1,000 USD.
Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.
Margin Call
A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader “theoretically” with the maintenance margin.
Most of the time margin calls occur when money management is not properly applied.
How are the mechanics of a Forex trade?
The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.
It’s very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.
Raul Lopez is a full time Forex trader and founder of http://www.straightforex.com a high quality Forex training and Forex trading course provider.