How to trade in forex
How to trade in forex.
Just like stocks, you can trade currently based on what you think its value is (or where it's headed). But the big different with forex is that you can trade up or down just easily. if you think a currency will increase in value , you can buy it . If you if you think it will decrease, you can sell it, with a market this large, finding a buyer when you're selling and a seller when you're buying is much easier than other markets, subject to available liquidity.
Maybe you hear on the news that china is devaluing its currency to draw more foreign business into its country. If you think that trend will continue, you could make a forex trade by selling the Chinese currency against another currency, say, the US dollar. The more Chinese currency increase in value while you have your sell position open, then your losses increase and you'd want to get out of the trade.
--Here there is a question (how to buy and sell
All forex involve two currencies because you're betting on the value of a currency against another. think EUR/USD , the most trade currency pair in the world .EUR , the first currency in the pair , is base , and USD , the second , is the counter . When you see a price quoted on your platform, the price how much one Euro is worth in us dollars. You always see two prices because one is the buy price and one is the sell. The difference between the two is spread. When you click buy or sell, you are buying or selling the first currency in the pair.
Let's say you think that Euro will increase in the value against the us dollars .your pair is EUR/USD. Since the Euro is first.
If the EUR/USD buy price is 0.70640, then the spread is .4 pips. If the trade moves in your favor (or against you), then, once you cover the spread, you could make a profit or lose on your trade.
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