Basic terms in currency trading

The currency this is the national exchange unit of a country. For USA this is the dollar, for Europe this is the Euro and the yen for Japan. The currency rate represents how currencies relate to each other. On the forex market we usually use the term currency pair. Depending on the term for which a deal takes place the currency deals can be forward or SPOT.

 The spot currency rate is a rate, which is determined at the moment of making the deal. A forward currency rate is a one, which will take place in a future date. Whatever type of currency trading you choose you should always make sure that you select the right broker. There are many brokers to choose from. In the last decade they are probably more than 1000 forex broker popping up every month. So how to choose the best one?

 Select a broker with a good reputation, check its demo account and then open account through a forex rebate service. This will give you the possibility of earning fixed amount of pips for each trade execute in forex. Basically the spread is a difference between buy and sell price so each time you execute a deal you have to wait enough time to overcome the spread. In this case forex rebates help you a lot because you actually save a part of the spread. There is not anything more annoying than waiting for the price to come up. So FX cash back will definitely help you out with that.

 When choosing a broker it is way easier to start with a demo platform. Trading with a demo account will help you understand the main market movers. Select the instruments you want to trade and place a few trades. That is great way of examining how the market price is moving and what spreads do you receive in the platform. Remember that nobody will ever know where the price goes. So this is a game where you have to be careful and have your proper strategy.

 Always use stop losses since they are like your trigger to stop trading when you lose a lot. Once placed the stop loss must not be moved. Do you know that 90% of the trades lose because traders do not obey this rule? Like in everything else the trading has its own rules. But what is more important you have to obey those rules. Otherwise it is not going to work.

 As a rule of thumb you should also learn forex before thinking of diving to deep waters of real trading. The executions might be not always favorable for you so you have to be prepared for all kind of surprises both good and bad. Reading forex articles such as this one will certainly give you the basics but you definitely have to try all your strategies in practice. The demo account is free and there is no obligation to deposit money, so here is a good way to start trading.

 Make sure that you choose a regulated broker – FSA or at least Cyprus based borker is a must. Trading with a non-regulated broker can ruin your account and lead to great losses. So avoid brokers like BVI or no regulation.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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