Forex Trading Tutorial - Your Guide to Forex Trade

Forex Trading Tutorial - Your Guide to Forex Trade

Forex market or foreign exchange market is a market which operates 24 hours a day and involves trading in different currencies of the world. Booking profits and making money by trading in forex is no longer restricted to experts - ordinary people like you and me can make profits by using readily available forex trading tutorials, some of which are available online.

The players in this trading system are major financial institutions, central banks, retail currency traders, speculators, large international companies, government institutions, companies with overseas operations etc. The trading instructions are exchanged via global network system over telephone or computers. Investment made by traders is largely governed by movement of major currencies.

Majority of forex trading tutorial with the purpose of educating the users on how to forex trade emphasize and begin with the basics of forex which are:

• Each world currency is denoted by a uniform three letter code which is used in forex quotes by all involved. Normally instruments which are traded by forex traders/ investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are EUR/USD, GBP/USD, USD/JPY, AUD/USD.

• Trade can happen only when you compare one currency with another. To quote an example - you cannot trade by buying and selling USD alone. You need to compare the USD rate to any other world currency rate if you desire to undertake a forex transaction. In the above example say you may wish to sell USD and purchase EUR against it. Forex trade will happen when you accept the price offered for this transaction by your dealer. To continue with our example upon receipt of your concurrence to the price quote, the dealer will actually buy and sell as per your instruction and confirm the price for this trade transaction involving sale of USD and purchase of EUR.

• Forex trading tutorial give detailed explanation of some of the technical terminologies also. For example technical terminology for first currency of a currency pair is base currency which is USD in the referred example. The second currency is referred to as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.

Forex trading tutorial are indeed of great help in getting us started. However a word of caution here. While trading in currencies take care to ensure that you trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit.

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