The Top 10 to Trading Currency

The Top 10 to Trading Currency

1. Always combine fundamental and technical analysis to arrive at your best trading ideas.
2. Always use the pyramiding method of building up a position in a currency pair. Use the same pyramiding method when you are closing out the position.
3. Go long commodities currencies and short safe-haven currencies when the overnight markets are up big.
4. Use carry trades to reduce risk and capture a steady stream of income for your overall investment portfolio.
5. Use your smart phone or iPad to keep on top of your open trades and account balances.
6. Learn to walk away from your trading desk after a really good day (or week) in the currency markets.
7. Learn to read between the lines and see what the central bank websites are really saying about their currencies’ future prices and interest rates.
8. Always trade your currency portfolio at the same leverage ratio; use the same one that your demo account is set at and you are used to managing.
9. Know that it is okay not to trade during times of market upset, as these times can be very difficult to trade and make a profit in.
10. Use diversification of different currencies even if your overall FX account is aimed toward the same overall market direction.

What is Currency Trading? Currency Trading Basics

The Currency trading market is a multi trillion dollar market where world currencies are exchanged back and forth on a daily basis

How is currency trading done?

Retail currency trading is typically done through brokers and market makers. Traders can place trades through their brokers who will in turn place a corresponding trade on the interbank market.

Why do currency values change?

Currency values can change for many reasons. Sometimes they react to political and economic news, sometimes they are driven by speculators, and sometimes they are driven by international business flows. If companies in the United States are importing large quantities of products made in Europe, they will need to exchange their US Dollars for Euros to pay for the products. When this is done in very large quantity over a short period of time, it raises the demand for Euros and the value of the Euro versus the US Dollar increases. This happens because dollars are being sold on the open market, while Euros are being bought.

Is currency trading risky?

Currency trading can be very risky. Currencies tend to be very volatile compared to other markets. The real key to success with currency trading is to use conservative risk management. There are many components to effective currency risk management, but the bottom line is to use caution and have a trading plan.

Who trades currencies?

Currencies are traded by individual retail investors, financial institutions, and corporations doing business. Retail investors and banks are trade to make profits and corporations usually trade in the normal course of the international business process.
 

Introduction about forex trading

Forex Trading is trading currencies from different countries against each other. Forex is acronym of Foreign Exchange.
For example, in Europe the currency in circulation is called the Euro (EUR) and in the United States the currency in circulation is called the US Dollar (USD). An example of a forex trade is to buy the Euro while simultaneously selling US Dollar. This is called going long on the EUR/USD

How Does Forex Trading Work?

Forex trading is typically done through a broker or market maker. As a forex trader you can choose a currency pair that you expect to change in value and place a trade accordingly. For example, if you had purchased 1,000 Euros in January of 2005, it would have cost you around $1,200 USD. Throughout 2005 the Euro’s value vs. the U.S. Dollar’s value increased. At the end of the year 1,000 Euros was worth $1,300 U.S. Dollars. If you had chosen to end your trade at that point, you would have a $100 gain.
Forex trades can be placed through a broker or market maker. Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position. When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen literally within a few seconds.