Forex Basic Tutorial. Fundamental Knowledge About Currency Trading Market

Are you a newbie in Forex Market. Want to start your Online Forex Work soon. Before opening a real Forex trading account, you should have to learn many basic fundamental knowledge about Forex market. Hope you know that Forex is world largest liquidity market with daily trending volume over $ 2 trillion (USD). Generally investors like forex market because of its high liquidity, low transaction cost, low entry barrier and 24 hours market opening (except Saturday and Sunday-weekend). Here we share some basic Forex tutorials. Must read and share to be a successful Forex Trader.

1. What is Forex :-

Forex or FX stands for Foreign Exchange Market. It’s usually used for mutual exchange of freely convertible currencies. Forex is an international inter bank market. The spot Forex market is a 24 hours (24*5) international market where operation are carried out through such institution such as Central Bank, commercial Banks, investment banks, Forex Brokers and dealing centers, retirement fund, insurance companies, transnational companies etc. In the Fx market there has no restriction on short selling which means that a trader buy or Sell any currency pairs at a time. Trade can act on Forex market only via any financial intermediary (a bank or an exchange broker). Such company execute forex trading operation for a certain percentage of transaction operation which is called as spread .

2. What is PIP ?

‘PIP’ stands for ‘Percentage in Point’. Actually. a PIP is a smallest price movement of a traded currency pairs. You can also call it as ‘point’. PIP is very important in Forex Trading because calculating of profits or losses. Fore all major currency pairs, PIP generally calculated as 0.0001 or 1/100 of a cent. Beginners always think that it is very much low volume. But actually not. For instance, Suppose you trade on EURUSD currency pairs. You open a BUY (1 lot) position at 1.3650 points. After few minutes the pairs moves to 1.3665. Then you close your positing. That mean you get 15 PIP profits. As you bought only 1 lot in US $. So your profit is $ 15.

3. What is Leverage ?

Leverage is a financial tool which are generally used by Forex/Stocks brokers to calculate exposure to point their actual investment. You may understand better if we share an example with you. Think, you invest $ 100 to your real forex trading account. Now, you want to trade on EURJPY counter. If, your broker give you 1:10 leverage, that mean you can BUY/SELL 10 times larger than your actual investment.

4. Major Currency Name and Symbol :-

Without knowing a currency name and it symbol, how can you trade on Forex. So that. here we like to share some major and popular currency names. Generally currency has three letters. The first two letter denotes name of the country and third letter stands as country’s currency. The currencies which the majority of trades focus called as majors. Check below