Currencies Trading Introduction
Currencies trading is also known as forex trading and is the most liquid market in the world. Forex markets are bigger in daily volume than any other market including the stock market, bonds, and futures markets. A trader can enter or exit the market whenever they prefer and there are no commissions, daily trading limits, and there are no lock limits. When trading currency online they are always bought and sold in pairs. A currency pair that is very popular and traded a lot is the Euro vs. the U.S. Dollar (EUR/USD). Currencies trading is the fastest growing division of the online trading community.
There are basic order types that forex traders must know in order to trade successfully. These include terms such as market order, limit order, stop order, trailing stop order, take profit order, and many more. These are actions taken when currencies trading and some of them are explained below.
1) Market order – this is an order to get in or out of a position at the current market price. The price is not guaranteed, but it does guarantee that you will get in or out of the market.
2) Limit order – this order specifies that a trade must be executed at a specific price in the future. It can be used to enter or exit a position when trading currency but the execution of the order is not 100% guaranteed.
3) Stop order – this order again does not guarantee execution and price, and it is used to protect against incurring additional losses when currencies trading. It is most commonly used to set an exit point for a losing trade in order to try and limit the risk of a specific forex trade.
4) Trailing stop order – this is not considered a “hard “stop like the regular stop order. This order allows the trader to configure the stop order to continue to follow the price movement in real-time by specifying the distance in pips that the trader would like the stop to move. This depends on the market direction in the forex exchange at that time when currencies trading.
5) Take profit order – this is a limit order that traders can use to attempt to capture incurred profits and exit a position.
6) Day order – this order is in effect until the end of the trading day. Since the fore market is a 24-hour market, the end of the day is either a set hour or until the opening of the Asian market.
There are additional terms that an investor must learn to become a successful forex trader such as the terms order cancels order and good-till canceled order. If you are interested in learning how to conduct currencies trading, check into online resources to broaden your education about the currency exchange, and also read a lot of books on forex currency trading for beginners. It is also wise to work with someone who is experienced in the market and who can act a mentor. Lastly, it is important to keep on top of new information and current technology available for traders.