Where does the word Forex come? Foreign exchange. Forex Trading All is a financial market that is opened all the day long, comparing to others, it being the opened place where always a major financial center that has hedge funds, banks, individual investors, dealers, speculators and corporations are trading currencies that are working constantly.
An important factor of the investment made in the Forex Market, that determines how the currency exchange rate can affect the value of one’s investments is the Forex Quote. The cumulative buying or selling of the currency is some of the elements that may cause a high or low movement in the Forex investment. Multiple factors drive the fluctuations rate, like a country’s political, social and fundamental economic environment, or the policy of the central banks fiscal, and even the interest rate adjustment.
Each currency traded in Forex Investment is being traded in pairs, and each one has a specific symbol. For example: EUR for Euro Dollar, JPY for Japanese Yen, GBP for Pounds Sterling and similarly, CHF for Swiss Franc etc… Taking into consideration the pairing matter, it would go as such: , EUR/USD would be Euro-Dollar pair, GBP/USD would be pounds Sterling-Dollar pair and USD/CHF would be Dollar-Swiss Franc pair and so on..
The base currency in Forex Trading is being called the first currency quote. One will always notice that USD will always going to be quoted first, excepting: Pounds Sterling, Euro Dollar, Australia Dollar (AUD) and New Zealand Dollar (NZD) in the Forex Trading chart. One has to always keep in mind that the central currency of the Forex Market is the US dollar, and thus, 90% of the transactions will involve it.
How the currencies are quoted in the Forex market in the most important question of all. Two numbers get to make a Forex quote. The bid is the first number, and the offer or the ask price is the second one. If you take as an example: GBP/USD, you will be shown:
1.5354/1.5358. The bid price is 1.5354, it being the first quote, the price where the traders against the USD Dollar, will be prepared to buy the Euro. The offer is 1.5358, the second number, or as it is usually called, the ask price, it being the price for the people that are ready for the Euro against the US Dollar to be sold. If you look thoroughly in a Forex quote, a difference between the base price and ask price will be noticed, it being called the spread. Going back to our previous example, we can say that 1 Euro =1.5354 US Dollar.
The pips or points are the forms profit is being measured in the Forex trading. Price interest point will give us the PIP. 50 pips mean the GBP/USD moves from 1.5645 to 1.5695. The last decimal place of a currency quotation is a pip, or 0.001, excepting the Japanese Yen or Yen cross rates.
Gaining profit from foreign currency movements is the goal of all Forex Traders. What is good about this trading is the fact that immense rewards and amounts of money that one earns from Forex Trading can be life changing, thus giving him or her financial freedom that a person needs. This being said, a person has to have an adequate, continuous training in this type of education. Thus, technical analysis, chart patter and formation, trade management may be included, such as stop loss and profit target or even money management. If the right amount is being invested in Forex Trading knowledge, at a spot-on time, the currency trading success can be enjoyed on the long term.