Investors everywhere are buzzing about the same thing: the forex market. This article serves as a crash course in all you need to know about currency trading. It's what we like to call forex 101.
Forex is an abbreviation for foreign exchange. That's because it is a worldwide market that trades currencies from all over the world. Currencies are traded in pairs.
The most common pairs are:
EUR/USD: Euro
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
USD/CHF: Swiss franc
AUD/USD: Aussie
These pairs are so popular that they make up over %85 of all the currency traded on the foreign exchange market. Because they are always traded as pairs, when a trader goes long on or buys Euros, he or she is automatically buying the EUR and selling the USD. Likewise, if a trader decides to go short on or sell the Aussie, he or she is selling the AUD and buying the USD.
The base currency is considered to be the first currency of each currency pair. The second currency is considered as the quote currency or sometimes called the counter currency.
Every pair of currency is depicted in units of the quote currency required to get one unit of the base currency.Prices of pairs are based on currency exchange rates. For example, if the EUR/USD pair is listed at the price of 1.2545, then 1.2545 US dollars are needed to get one EUR.
When you begin trading, you will see currency pairs listed with a bid and ask price. The bid price is always lower than the ask price. The bid price is the amount that a broker is willing to buy at and therefore the trader sells at this price. Similarly, the ask price is the amount that a broker is willing to sell at.
Believe it or not...that's it! That is all it takes to get started trading on the forex market!
Check out my "HOT" new reviews for the latest automatic Forex Software [http://www.forextradingrobots.net/] and put your trading on AUTOPILOT! If you're sick and tired of staying at your computer for hours trading Forex [http://www.forextradingrobots.net/howtoforex/], then read our reviews on some of the latest automatic trading software.
Article Source: http://EzineArticles.com/2160956
