People who are new to Forex trading may be bewildered by the fact that a foreign currency is traded in pairs. Two foreign currencies are paired together and currency is traded in pairs, so if a trader believes in the Euro and believe that the value of the Euro will rise in the coming weeks, then he will buy Euros. If he thinks the value of the Euro will drop, then he will sell the Euro.
The value of a currency is assessed in comparison with another currency. The currencies are always paired: the US dollar/Australian dollar, Euro/US dollar, US dollar/Swiss Franc, and so on.
Currency Pairs
There are six currency pairs that are the most popular. These are known as the ‘majors’, because they are the most popular and heavily traded currencies. The commissions for trading these currency pairs are extremely high, and usually traders make between 10 and 100 trades in a day, or more if they are highly leveraged.
The don’t measure up to the hype
All the automated trading systems that promise they can make you rich on autopilot fall way short of the mark. You don’t get a better performance than that! Even if you find a good Automated Forex trading system, you still need to know the basic fundamentals and maths to be successful.
Take a bit more time. Find yourself a good mentor who has experience in currency trading and teach you the basics. If you are lucky, then he may be a friend who has been trading for a long time and knows the secret to success. Bring him to your table.
We don’t have time to introduce you to all the foreign currency markets, so we will move on to the currency pairs. There are six major currency pairs:
- US Dollar/Euro
- US Dollar/Japanese Yen
- US Dollar/British Pound
- US Dollar/Canadian Dollar
- US Dollar/Swiss Franc
- Euro/US Dollar
Technical Analysis
Technical analysis is not a difficult technique to understand. You cut a chart in two and look at the price movements. You look for support and resistance levels and trade into them. The theory is that there are critical price levels where the currency pairs reverse back to and then there are good places to buy. You can normally buy on support and sell on resistance.
The six most popular major currency pairs
If you follow a lot of currency pairs, then you have to follow theireterminations with technical analysis to have a viable chance of winning.
It is actually possible to create a home office for trading currencies. It is very useful to have enough space as trading will take place frequently during the day and it will be difficult to fit everything into a shoebox. Here is an example of a possible office for trading currencies.
You will need a television (either via your internet connection or through subscription to a different TV network) and a laptop or computer with at least decent operating system.
A trading desk is crucial. It is important to have your trading station in a location where you can see the currency rates on a screen. It is also important to have a number of monitors set up so you can keep track of information from various sources.
You will also need charts and a number of indicators that will help you to make trading decisions.
If you are learning about Forex trading, what you need is a way to find information quickly. There are plenty of good free resources that will help you with this. If you download the ” Detecting Forex Trading Signals” from Price Action Reviews, you will be able to study how to use the Indicators and the charts to find information that tells you when to trade.
Remember that Forex trading involves probability, so there is no guarantee to make a profit. You could end up losing money or earning a fortune. It’s all about having the right mindset and finding the best resources that are easy to use.
Good luck with your learning!
