Basics Of Forex Trading

Word Forex is an abbreviation of "Foreign exchange", and trading in Forex seems to be really exciting as trading to get value while staking the price of currency is one of a kind of trading most traders prefer to get into. Generating grand income through trading platform has become one of the fastest growing business globally. It has resulted in the increased number of traders belonging to different age groups, who are actively growing with the growth of market. This had not only strengthened the economy but also have opened a way for those who want to generate an extra income with their on going busy schedule.

Forex Market is one of the largest market in the world which stays open for 24 hours a day, creating golden opportunity for all kind of traders belonging to any geographical location to trade as per their availability. Traders from various corners of globe are indulged in currency trading, where the basic currency is USD and the currency against it may vary. Though its the largest market but due to highly selective currencies available on trading platform traders have special orientation and bent towards selected pair of currencies which is a no confusion state due to less options involved.

Volume of daily trade involved in Forex market makes it the most liquid market in world, where the flexibility to buy and sell under normal market condition is possible. The two most common ways to trade in the Forex market is to buy and sell the currency pairs in similar way to that of stocks, here you go long one currency and short other one. The second way involves purchasing of derivatives that tracks movement of a specific currency pair. Both of these methods are technically as same as the trading in equity market.

Basic Terminologies useful for Forex traders includes:

PIP: The full form of PIP (Percentage in point), the term refers the basic point difference or can also say minimum price increase in a Forex trading rate, PIP is also known as 'point'. The general and most common pip is said to be 0.0001

Ask Price: The price you wish to bid for buying currency at is termed as 'Ask price', its the price offered by the currency market to the trader on which buying is possible, its that price where the market is ready to sell the currency to the trader who wants to buy currency.

Bid Price: The price you wish to bid for selling currency is termed as 'Bid price', price offered by traders to currency market on which selling is possible for the trader, its that price where the market is ready to buy currency from the trader who wants to sell currency.

Spreads: The underlying difference between the Ask price & Bid price is termed as 'Spread', this is mostly used terminology which often confuses the beginners and

Currency rate: The rate which defines one currency's value over another currency.

The best part of trading in currency pairs is that you don't need to spend much time over analysing which currency pair to move with and is comparatively easy to that of stocks.

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