Introduction To Forex Trading

Well this is the first lesson you are going to learn. So I think it is important to know the basics of Forex. Let's see what is Forex? Forex or foreign exchange market is the largest financial market in the world which exchanges more than 3 trillion of dollars per day. When comparing with New York stock market Forex is a huge member of financial markets.

Let's see what are you going to trade in Forex market? As you know you can buy a house for 1000$ and then you can sell it for 1250$. The profit is 250$. In that business you bought house physically. Same thing is happening in Forex market as well. You will buy a currency (actually currency pair) and you will sell it once the price increased. The exception is in Forex you will not buy any currency pair physically. You only invest and looking for price movements and sell when you got profit. 

Well now you will ask why you should learn Forex. Why can't I start it just now? Yes you can start just now. But I can ensure that will not be able to become a good trader. In other word you will loose all the money that you invest. So you MUST learn how to trade effectively and efficiently in Forex market. I saw lots of people are joining with Forex brokers but their names will disappear after few weeks of trading. Because they are not aware about the techniques of trading  

I'm sure you have heard "Value fluctuates of Euro", in news. So what does it mean? It means that the price of the Euro is going up or down. Let me give a value to Euro by using dollars. Imagine that one Euro is equal to 1.2891 dollars and look at the following;

          1 EUR  =  1.2891 USD

          Therefore    1 EUR / 1 USD = 1.2891

          Simply  EUR / USD = 1.2891

I think you have understood the above simple equation.

The red color words in above equation are known as a "currency pair". In Forex you are going to buy or sell these currency pairs. Value of a currency pair will depend on the economic stability of particular country. If the economy of Europe went up, that means EUR/USD pair will go up. I think It is little bit more for you as a beginner. I don't want to complicate it. So simply remember that you can either buy this currency pair, if it's value (that is 1.2891) is low and if you expect the value to increase in future, and make a profit by selling it at the high value OR sell the pair if it's value is high and if you expect the value to decrease in future, and make a profit by buying it at the low value.

The fluctuation of the currency pair is very small. So you need to invest large sum of money to get a reasonable profit. Don't worry we have a option. Actually Forex brokers have an option. So left it for Forex brokers. I will explain it later lessons.

What are the currencies used in Forex market

There are currencies and commodities to trade in Forex. There are 8 major currencies used in Forex market for trading. Those are 


SymbolCountryCurrency
EUR
USD		Euro members
United States		Euro
Dollar
JPYJapanYen
CHF
GBP		Switzerland
Great Britain		Franc
Pound
CADCanadaDollar
AUDAustraliaDollar
NZDNew ZealandDollar

Following are the currency pairs you can make by using above currencies. In Forex market you will sell or buy those currency pairs.

EUR/USD             AUD/USD 
EUR/CHF             EUR/CAD
GBP/USD             EUR/JPY
NZD/USD             EUR/AUD        
USD/JPY              AUD/JPY
USD/CAD             GBP/JPY             
USD/CHF             CAD/JPY
EUR/GBP             CHF/JPY


In this lesson I am not going to discuss more about this. In my next lesson I will discuss on PIPS, Leverage and Profits.  

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