Forex Trading Basics that Every Trader Should know
Learn Forex Successful Strategies from Forex Experts How to trade forex properly for making real profits in your life?
1. What is FOREX ?
FOREX = Foreign Exchange (Exchange Currencies)
2. What is TRADING ?
TRADING = Buying and Selling anythings (Any Goods or Products)
3. What is FOREX TRADING ?
FOREX TRADING = Buying and Selling Currencies | Buying One currency and Selling another currency at a same time.For Example : Consider that, I have USD in my hand, If I want to Buy EURO, then I need to spend (SELL) my USD Currency to get (BUY) EURO Currency.
4. What is FOREX MARKET?
MARKET = Place for Buying and Selling anythings
FOREX MARKET = Place for Buying and Selling Currencies
Forex Market is the World’s No.1 Financial Market with daily turnover of 8 Trillion USD. The world’s largest NewYork Stock exchange has a daily turnover of only 180 Billion USD.
5. What is the main difference between Physical Trading and Online Trading with 1:100 Leverage ?
PHYSICAL Trading | ONLINE Trading |
|---|---|
| 1. You need to pay full 100% money to buy your product. | 1. You just need to pay only 1% or lesser money to buy your product. No need to pay anymore forever. 🙂 |
| 2. After buying, Your product will be in your hand. | 2. After buying, Your product will be on hold in your trading account. |
3. You can make only Small profits in Small Money. Example : You buy a 100$ worth gold by paying full(100%) money Physically, After 2 month, if your gold becomes 110$, then your profit will be 10$ for your 100$ investment. | 3. You can Make Big profit profits in Small Money using Leverage Option. Example : You buy a 100$ worth gold by paying only 1$ or lesser money by online trading, After 2 month if your gold becomes 110$, then your profit will be 10$ for your 1$ investment. This is how you make Big profit in small money. |
| 4. It takes some time to buy your product. | 4. You can Buy your product instantly within 1 seconds. |
| 5. If price of your product falls down, you will loss more. | 5. If price of your product falls down, you will loss maximum 1% only. Because, you invested only 1% of your money. |
The above Comparison seems to be very exciting and interesting for most of them. This is the reason, most of the people coming to Online trading.
6. Difference between Forex Market and Other Markets:
Other Markets | FOREX Market |
|---|---|
| 1.You can earn profit in Share Market, Only If the share market moves up. If it moves down, you will have only way to loss. | 1. In FOREX Market you can make profit on both Up and Down movements. So, you can make profit at all the time under any situations. |
2.Other Markets works only limited time period. Example : New York Stock Exchange working hours from 9.30 am to 4 p.m | 2. FOREX Market works 24 hours from Monday to Friday(24/5). You can trade Forex market at anytime as you like. |
| 3. Other Markets has more commissions for every trades. | 3. Forex Market has very low commission than any other Financial markets in the world. |
4. Other Markets has very small volume of funds turn over. Small turnover = Small Movement = Small Profit. | 4. Forex Market has a very large turnover of 8 TRILLION$ USD daily. Very Large turnover = Big Movement=Big Profits. |
| 5.Other trading platforms are not much easier to learn and trade. | 5.Forex Trading Platform are User Friendly (You can do trading at anywhere, anytime using Mobile Phones, Tablets, Laptops,etc,.) |
7. How FOREX Market moves ?
Forex Market moves due to the transactions done by the following firms.
- Major Banks
- Big Interbank Networks (EBS) & Reuters.
- Small and Medium sized banks.
- Hedge Funds, Retail Market Makers, Retail ECNs, Commercial companies.
- Retail Traders (Individual traders)
Our analyst team worked with major banks, financial institutions, forex brokers. If you want to receive free forex analysis signals. Join free.
8. Why Forex Market is possible to make profit in both Up and Down movements ?
Forex market has 2 currencies combined together, called as Currency Pair.
Example : EUR/USD, USD/JPY, USD/INR
Why Forex has 2 currencies combined together ?
Forex Trading = Buying and selling currencies (Exchanging currencies)
While doing One Exchange Transaction, we are Selling One currency (USD) and Buying another currency (EUR) at a same time.
Here totally 2 Currencies are involved in One Exchange Transaction.( Example : Selling USD and Buying EUR = 2 currencies involved for one transaction)
This is the reason, Forex market has 2 currencies combined together.
9. Technical name of Currency pair :
Example 1 : EUR/USD
EUR = First Currency = Base Currency.
USD = Second Currency = Counter Currency or Quote Currency.
Example 2 : USD/INR
USD = First Currency = Base Currency.
INR = Second currency = Counter Currency or Quote Currency.
10. How Forex Market Moves UP and DOWN ?
Let’s consider one example : If there are More people buying one product (example : GOLD),
More Buyers for GOLD => More Demand => Price will Increase Higher (Gold Market moves up)
Forex Market has 2 currencies combined together. Example : EUR/USD
If First Currency (EUR) becomes strong (More Buyers), then EUR/USD Market will Move UP.
If Second Currency (USD) becomes strong ( More buyers), then EUR/USD market will Move DOWN.
11. Placing New Trade order : BUY ORDER & SELL ORDER
Buy Order =Buying First Currency
Sell Order = Buying Second Currency
12. How is it possible to Make Profit in Forex trading at anytime under any situations ?
If First Currency Strong => Market Moves UP =>Place Buy Order =>Make Profit
Second Currency Strong => Market Moves DOWN => Place Sell Order =>Make Profit
13. Types of Pending Orders in forex trading :
Pending order = placing the new buy or sell order in advance (or) Pre Booking price.
There are 4 types of Pending orders.
- Buy limit = placing “pending buy order” below the current market price.
- sell limit = placing “pending Sell order” above the current market price.
- buy stop = placing “pending buy order” above the current market price.
- sell stop = placing “pending sell order” below the current market price.
14. Stop Loss and Take Profit in forex :
Stop Loss = If you want your trade order to close with limited loss automatically, then you need to use Stop Loss (SL)
Take Profit = If you want your trade order to close with limited profit automatically, then you need to use Take Profit (TP)
15. Technical terms in Forex :
Bid Price = Selling price
Ask Price = Buying Price
SPREAD = Difference between Buying and Selling Price (or) Difference between Bid and Ask Price
LEVERAGE = It is the option used for buying More Valuable things (or) products with very small money.
Example : If you have leverage of 1 : 100 = You can buy 100$ valuable product with just 1$.
The above details are just the basics in forex trading.
If you are interested to become a Successful Forex trader, you should have to learn more about the market. You can check our Next Level Forex Trading Courses here : Click here to see the details.
If you need any help or have any questions about forex market, please click here to contact us now (or) write us your message to support@forexgdp.com
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What is forex trading ? How to Trade Forex in from home or anywhere in the world? Forex Trading means buying and selling Foreign Currencies. Trading forex market in South Africa is super easy. There are many forex brokers in sout Africa such as XM, IC markets, and worldwide top forex brokers are accepting South African Traders.
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