What is currency pairs of Forex
Each currency pair is made up of two parts: the base currency and the quote currency. For example, the U.S. dollar/Canadian dollar example we just discussed is paired as USD/CAD. The base currency is always to the left of the slash (/) mark; the quoted currency is always to the right of the slash. It is the direction of the base currency you consider when deciding whether to buy a currency pair or sell it. If you believe the base currency will appreciate against the quoted currency, you will buy the currency pair. If you believe the base currency will depreciate against the quoted currency, you will sell the currency pair. This is an important distinction for new traders to remember because it is easy to buy by accident when you meant to sell. Currency pairs offered on the forex market are constructed using currency from both developed and emerging markets.
Table 1.4 lists the most common currencies, their countries, and their International Standards Organization (ISO) codes used in the forex market to construct currency pairs.
Currencies are traded in standard lot sizes to facilitate efficient trading on the forex market. The standard retail lot is 100,000 units of the base currency. Most currency dealers offer 10,000-unit mini lots and 1,000-unit micro lots.
Table 1.4 lists the most common currencies, their countries, and their International Standards Organization (ISO) codes used in the forex market to construct currency pairs.
Major Pairs Major currency pairs are created by pairing currencies from countries with highly developed economies and financial systems. Major currency pairs are the most liquid and heavily traded currency pairs on the forex market. Currencies among the majors include the euro, U.S. dollar, British pound, Swiss franc, Japanese yen, Australian dollar, and Canadian dollar.
Cross-Pairs Some currencies are not directly quoted against each other; rather, they are synthetically traded by combining two different pairs. These pairs, known as cross-pairs, include currency pairs such as GBP/JPY, EUR/JPY, EUR/CHF, and GBP/CHF. When a trader executes a trade to buy GBP/JPY, the trade is really constructed by buying GBP/USD and selling USD/JPY. The dollar component of this trade is equaled out and the trader ends up long GBP and short JPY. Because these pairs are constructed with two different currency pairs, the spread or cost to trade a cross-pair is significantly more than a typical major currency pair, such as EUR/USD.Currency Lots
Currencies are traded in standard lot sizes to facilitate efficient trading on the forex market. The standard retail lot is 100,000 units of the base currency. Most currency dealers offer 10,000-unit mini lots and 1,000-unit micro lots.
Some currency dealers offer a 100-unit nano lot. Positions can be sized larger by purchasing multiple lots. Fortunately, you don’t actually need $100,000 in your trading account to buy a single standard currency lot. Currency dealers offer various levels of leverage, allowing you to control full-sized lots with significantly less capital in your account. We discuss margin and leverage later in this lesson.
Continue to How a Currency Trade Works
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Trade Machanics
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ReplyDeleteThe problem is, as you may have already experienced, too many false breakouts. You see trend lines everywhere, however not all trend lines should be considered. You have to distinguish between STRONG and WEAK trend lines.
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Drawing trend lines is one of the few easy techniques that really WORK. Prices respect a trend line, or break through it resulting in a massive move. Drawing good trend lines is the MOST REWARDING skill.
ReplyDeleteThe problem is, as you may have already experienced, too many false breakouts. You see trend lines everywhere, however not all trend lines should be considered. You have to distinguish between STRONG and WEAK trend lines.
One good guideline is that a strong trend line should have AT LEAST THREE touching points. Trend lines with more than four touching points are MONSTER trend lines and you should be always prepared for the massive breakout!
This sophisticated software automatically draws only the strongest trend lines and recognizes the most reliable chart patterns formed by trend lines...
==> http://www.forextrendy.com?kdhfhs93874
Chart patterns such as "Triangles, Flags and Wedges" are price formations that will provide you with consistent profits.
Before the age of computing power, the professionals used to analyze every single chart to search for chart patterns. This kind of analysis was very time consuming, but it was worth it. Now it's time to use powerful dedicated computers that will do the job for you:
==> http://www.forextrendy.com?kdhfhs93874
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