What is Forex?
(ForEx, FX )
Is the market where currencies are traded. It is the most liquid and largest financial market in the world, trades 24 hours a day, five days a week.
How does it work ? In the Forex market are involved from a tourist who makes a purchase of currency exchange to travel, to large banks that perform transactions. Even the stock exchanges to exchange shares for domestic currency may affect the Forex market.
Which are the most traded currency pairs? All currency trades involve the simultaneous buying of one currency and selling another. In the popular currency pair EUR / USD (. Euro / dollar) U.S, for example, the first currency (euro) is called the base currency; the second (USD) is called the quote currency. When a trader buys a currency pair, he or she buys the base currency and sell the quote currency.
What are the major currency pairs? The four most traded pair in the forex market. They called the largest and include Euro / U.S. dollar (EUR / USD); US dollar / Japanese yen (USD / JPY); US dollar / Swiss franc (USD / CHF); and sterling / dollar U.S. (GBP / USD). The big trading powers within the greater volume and liquidity.
Why Forex traders need intermediaries? A forex broker acts as an intermediary between the two parties involved in a transaction currency: the buyer and seller. While you can buy or sell currencies directly through banks and other institutions, brokers typically offer services that benefit merchants and graphics platforms, analysis tools and access to the lever.
A Broker or also sometimes called broker is an individual or a company that charges a fee or commission for the execution of purchase orders and sales made by an investor. Forex Broker usually offers leverage in English called Leverage which is almost as if you lend money for profit.
1. This leverage is very powerful in both directions, you can benefit or harm you because the greater leverage, greater risk.
2. The role of a company when acting as an agent for a customer and charges the customer a fee for their services.
Pip – Pips
What is a Pip?
A pip is the smallest change in price that a certain type of change can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point – for most pairs this is the equivalent of 1/100 of one percent, or a base point.
We are going to put an example,
The smallest movement of the USD / CAD currency pair USD can make is $ 0.0001, or one basis point. The slightest movement in a currency not always have to be equal to a base point, but this is generally the case with most currency pairs. The Pip can move up or down, ie is when price moves up or down a currency or a change in the currency pair.
But it would be easy to understand. The USD / CAD is at 1.2820 – 30 mins, he has moved 1.2850. The USD / CAD 30 pips + moved. For a trader it is very important to take their relationship of those Pips Positive or Negative obtained in day, week, month, etc.
One trend is the general direction of a market or the price of an asset. Trends can vary in length from short, intermediate, long term. If you can identify a trend, it can be very profitable, as it will be able to trade with the trend. The idea is to see large-scale scene and the possible trend, if you can read and take action when the trend in a market force can a profit or a lost.
Support and Resistance
Support and Resistance * It is recommended to learn to distinguish and recognize trends before they learn the following:
Often analysts who speak of a certain security approaches a resistance or support is heard. These are simply the price levels or price range that a value, currency tend not to go (resistance) or go under (support).
Here is a picture where support and resistance EUR / USD 240Min the graph shown.
Indicator – Indicators
There are various and different types of indicators, each for its purposes and objectives. In this case we will focus more and see Forex Indicators 3 of the most basic.
Forex Technical Indicator
A technical indicator usually is a tool Any kind of metrics whose value is derived from the price of the generic activity in a stock or asset. To further facilitate the understanding of this, we can say that it is a tool that analyzable closing prices of both buying and selling, the indicator looks at this and gives us a better picture of the market.
Technical indicators seem to predict future price levels, or just the general direction of prices, worth noting previous employers.
Examples of common technical indicators include Relative Strength Index, Money Flow Index, Stochastic, MACD and Bollinger Bands®.
Take Profit is set of the price where you want to run an order to take a position corresponding earnings. It is widely used by currency traders specifying the exact type or number of pips from the current price point at which to close their current position for a profit.
Stop Loss¨can be defined as the opposite of Take Profit, but there are also times that we can use this to take profit or lock profits. First let’s define Stop Loss.
‘Stop-Loss’ o Stop-Loss Order’
It is an order placed with a broker to sell a security when a certain price is reached. A stop-loss order is designed to limit an investor’s loss on a security position. While most investors associate a stop-loss order only with a long position, but can also be used for a short position, in which case it would be purchased security if negotiated over a defined price.
A stop-loss order takes the excitement of business decisions and can be especially useful when one is on vacation or unable to see his / her position.
Caution is a knowing very well our broker, there may be occasions that such is the volatility and action in the markets that this action takes to run or not run on time. There are brokers who say their execution of Stop-Loss is not guaranteed, especially in situations where the trading of the shares or holes down (or up) in the price stops. Also it is known as “suspension order” or “order suspending market.”