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  • Forex Trading

    Here at TradeMoneta, we believe in transparency. That means that our knowledge, should be your knowledge. That’s why we’ve dialled back the jargon to bring you this easily-digestible, comprehensive introduction to Forex trading.

    Forex Trading: An Introduction

    With a daily average turnover in excess of $5 trillion (USD), it’s easy to be a little intimidated when starting out in the Foreign Exchange, but you needn’t feel alienated by the eponymous title. If you’ve ever been abroad, there’s a high chance that you’ve already participated in a Forex trading transaction.  As soon as you converted your hard-earned cash into another currency, that rate of exchange was informed by the supply-and-demand of the two respective currencies, determining how much you got in return. This relationship between the base (original) and counter (new) currencies forms the basis of a Forex trading transaction.

    Now, Forex trading exchange rates are fluid because currencies are traded on an open market, and are thus subject to ebbs and flows in supply and demand. Therefore, on a grander scale the importance of timing in a large oversea payment increases dramatically, but don’t worry, you’ll be starting small and working your way up. For now, Forex trading can be simplified into two processes:

    1.       Buying a currency because you believe its value will rise.

    Or

    2.       Selling a currency because you believe its value will fall.

    Before we get started on developing you Forex trading strategies, there are a few terms that you should know to begin with. Try to commit these Forex trading terms to memory as best as you can, they’re going to come in handy:

    Forex Trading Terms: Currency Pair

    ·         The EXCHANGE RATE between two CURRENCIES, for example: GBP/USD=1.25

    ·         This final number is referred to as ONE PRICE, and in this example, means that 1 pound is exchanged for 1 dollar and 25 cents.

    Forex Trading Terms: Price Chart

    ·         The price chart shows you the PRICE of a currency OVER TIME.

    ·         In a price chart, the TIME will run along the BOTTOM and the EXCHANGE RATE will run up the RIGHT.

    price of a currency

    Forex Trading Terms: Pips

    ·         Because Forex trading is based on minute changes in currency values, movements in price are measured in PIPS.

    This is the FOURTH number after the decimal, for example: 1.2500

    ·         If the value of the currency moves by .0001, that currency has moved by a SINGLE PIP.

    Now that we have some of the lingo out of the way, let’s have a look at some beginner Forex trading strategies, but remember, Forex trading decisions are subject to your own personal requirements, and as such can ultimately only be made by you.

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