Forex Trading for Beginners

Forex Trading refers to the trade of currencies of different countries. The currency of one country is exchanged for the currency of another country for numerous reasons like for example trade and commerce or tourism. Currencies are generally traded over a network of dealers which is spread throughout the world across all the countries with no central hub. The forex market is international and it stays active throughout the week, day and night, with the exception of weekends only.

If you are a beginner who wants to join one of the largest markets of the world, then you should first get familiar with some basic terminology and information about how the forex world works, before you jumpstart your journey in the top forex news of foreign exchange.

Pip    

The tiniest change in the price which is made by a given exchange rate is called Pip. Most of the main currency pairs are priced to 4 decimal places and the smallest change is of the last decimal point in them except in the case of Japanese Yen which is quoted to 2 decimal points instead of 4.

Currency Pair

Currency Pair consists of 2 currencies. One is called the “Base Currency” and the other is called the “Quote Currency”. The value of a currency is determined by the comparison to other currency. Base Currency is typically the domestic currency and the Quote Currency is the foreign currency in a direct quote and vice versa in an indirect quote. The currency pair tells how much of quote currency is needed to buy the base currency. Currency Pair determines the pricing structure of currencies that are traded in the foreign exchange world.

Cross Currency Pair

A pair of currencies not including U.S Dollar is traded in the forex trading platform together and called the cross currency pair. One foreign currency is traded for another without first being exchanged to U.S Dollars first.

Pair Trade

It is the case when the dealer is doing an exchange and buys one currency while sells another one at the same time. Usually, if the dealer is buying Euros then he would be selling Dollars at the same time or vice versa. Such kind of exchange is called a “Pair Trade”.

Spread

The difference between they bid and ask prices is called a “Spread”. It represents what price is given by a marketer to the trader to buy and what price is taken by the trader to sell the currency.