Candlestick Trading Blog
November 10, 2009
Learn Currency Trading
| Many investors opt to learn currency trading as a way to make money. As they begin to learn to trade currencies they find that foreign currencies are only bought and sold in pairs and a currency’s value is determined in comparison to another currency. The price of a currency pair equals the ratio of one currency valued against another currency. This tells you how much of the quote currency is required to buy one unit of the base currency. The base currency is the first currency in a currency pair and the second currency is called the quote currency. Many investors prefer to learn currency trading because they can trade currency 24 hours per day. Investors new to currencies should note that currency trading is also referred to as forex trading, FX trading as well as foreign currency trading. These terms all refer to the same exact thing. You will also hear terms such as currency market and forex market. Keep in mind that these are the same markets. In addition to understanding what base currency and a quote currency are, investors will also learn what it means when you buy currency pair and when you sell a currency pair. Basically, when you buy a currency pair (longing) you are actually buying the base currency and selling an equal amount of the quote currency in order to pay for the base currency. Conversely, when you sell a currency pair, (short selling) you are selling the base currency and you are buying an equal amount of the quote currency to buy the base currency. Additionally, when forex traders place their order to buy or sell a currency pair, they must take a position. They actually take a position based on the currency exchange rate, also known as the opening trade. Once the order is placed they have to then wait and see if the value of their position will turn profitable. This depends on whether or not the forex trader shorted the position or went long. Investors looking to learn about the forex market and how to trade forex, should also learn about the various factors that can affect the currency exchange rates. These include things such as inflation, government budget, trade levels, economic growth, politics, and trading psychology. To learn more about forex trading and the forex markets, continue to read the Candlestick Forum blogs and newsletters. Find out how you can trade using Japanese Candlesticks. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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