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Learn How To Trade Forex And How Does It Work

Forex trading in simple terms is the trading in currencies from the different countries against each other. Learn How to trade Forex and How does it Work.

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Learn How To Trade Forex And How Does It Work

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  1. Learn How To Trade Forex And How Does It Work

  2. Index • Learn How To Trade Forex • Why Is Leveraged Forex Trading Popular With Investors? • How Does Forex Trading Work? • Buying • Selling

  3. Learn How To Trade Forex • Forex trading allows you to speculate on the changes in the currency strengths over time, buying or selling and currencies trading one against the other. • Forex traders seek to profit from the variations in the exchange rates between currencies, speculating on whether one currency's value, like the pound sterling, will go up or down to another.

  4. The foreign exchange market is the most traded in the world, making it a highly liquid and dynamic market. • The high market liquidity implies that the prices can change rapidly in response to news and short-term events, building multiple trading opportunities for the retail forex traders.

  5. Why Is Leveraged Forex Trading Popular With Investors? 1. Trade on rising and falling markets • Trade in falling markets as well as rising markets. 2. Leveraged product • Use the small amount of money to control the larger position. 3. Volatility • Currency prices are constantly fluctuating with each other offering various trading opportunities.

  6. 4. 24-hour trading • Not restricted to the physical exchange hours. 5. Liquidity • The Spreads tend to remain tight meaning your dealing costs will remain low.

  7. How Does Forex Trading Work? • Forex is always quoted in pairs, regarding one currency versus another. • For example, USD/GBP the fluctuations in the exchange rate between those are where a trader looks to make their profit. • The first currency is the one that you think will go up or down against the second currency.

  8. When the trading currencies, you can think of the future direction of the market, taking either a long (buy) or short (sell) position depending on whether currency’s trading value will go up or down. • Forex price movements are triggered by the currencies either appreciating in the value or depreciating.

  9. Buying • When trading currencies, you buy the currency pair if you believed that the base currency would strengthen against the counter currency, or the quote currency weaken against base currency. • So, if we think that the Euro will strengthen against US Dollar, then we place a buy trade.

  10. For every point or pip, the Euro rises against Dollar, and we will make a profit. • It is important to recognize that the price of the euro weakens against the US Dollar, and we would make a loss for every pip it falls.

  11. Selling • Alternatively, you would sell the currency pair if you believed that base currency would weaken in value against counter currency. • If we believe the Euro decrease in value against the US Dollar, we place a sell trade, and for every pip, the Euro falls against US Dollar you make a profit.

  12. Should the value of the euro rise against dollar then you make a loss for each pip it rises. • Leveraged trading means you can put up the small amount of money to control a much larger amount. • It means you can leverage money further, but it means that losses will be magnified as well, so you should manage the risk accordingly.

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