How Currencies are quoted and what moves individual currencies?
One of the best advantages in Forex trading:
The amount of money you need for a trade (known as “margin”) is all you can lose!
You should know that despite the super-high impact offered by some brokers Forex (400:1), which means that if you put $ 1,000 for the runner who will trade as if it really $ 400,000).
FOREX is less risky than trading stocks or futures, where you can lose more than they have deposited in your account.
This kind of leverage does not exist in the futures market shares or
In shares or futures markets, often sudden and dramatic moves, against which you can not protect you, even your coverage stops.
His position will be liquidated in May at a loss and you will be responsible for any shortfall in the account.
But due to changes in market liquidity and depth on the 24-hour, ongoing, dangerous and limiting the trade deficit was almost eliminated moves.
Orders are executed quickly, without delays or partial fills. And finally, there is no margin calls. For protection, the broker will automatically close all or part of their open positions, equity, if your account falls below the level needed to fill positions.
Think of this as a final, automatic stop, always in his name to avoid a debit balance.
Currencies are traded in dollars referred to as “lots”
Forex, with most runners, you can choose between 2 different lots.
Mini or Standard Lots Lots.
One lot equals $ 100,000 in foreign currency. Margin requirements, using a 400:1 leverage, would be U.S. $ 250, in other words, controlling $ 100,000 worth of currency for only $ U.S. 250.
You mean the $ 250 deposit with a broker can trade $ 100,000 worth of currency?
NO, be aware that your account has the size to be more than the margin of the U.S. 250. For example, if a place to buy 1 standard lot (@ 100,000) USD / JPY and USD / JPY is quoted as 112.10/112.13 buy USD / JPY at 112.13.
Your account balance would be $ 220 because you paid $ 30 or 3 pips on this trade.
If you do not immediately close the trade, you have to sell at 112.10 (the price) for a loss of $ 30.
In fact, it can not obtain the implementation of this trade as a trading platform for brokers to refuse his request, by reason of insufficient funds in your account.)
Therefore, your account balance must be at least $ 280. $ 250 for the range of $ 30 for trade.
BUT …. If, after having initiated the trade to buy USD / JPY at 112.13, and USD / JPY 1 pip is the next second (around $ 8), its position is automatically closed, because the margin deficit.
I will explain later, to have sufficient size to trade in Forex market.
Currencies are always traded in pairs in the FOREX. The couples have a notation that expresses what currencies are exchanged.
The symbol for a currency pair will always be in the form ABC / DEF. ABC / DEF is not really a currency pair, is an example of a symbol for a currency pair. In this example, ABC is the symbol of a country’s currency and DEF is the symbol of the currency of another country.
Some of the most common symbols used in the Forex market are:
USD – U. S. Dollar
EUR – The currency of the European Union “EURO”
GBP – Pound Sterling or cable
JPY – Japanese Yen
CHF – Swiss Franc
AUD – The Australian dollar
CAD – Canadian Dollar
There are symbols for other currencies as well, but they are the most commonly traded ones.
The money can never be sold by itself. So you can not always trade itself dollars. You always need to buy one currency and another currency VENDRE to complete a transaction as possible.
Some of these currency pairs are traded the most:
EUR / USD Euro against U.S. Dollar
USD / JPY U.S. Dollar against Japanese Yen
GBP / USD British Pound against U.S. Dollar
USD / CAD U.S. Dollar against the Canadian Dollar
AUD / USD Australian Dollar versus U.S. Dollar
USD / CHF U.S. Dollar Against Swiss Franc
EUR / JPY Euro against Japanese Yen
The slogan of the left is the base currency.
The motto of the / is called the counter currency.
When you place an order to buy EUR / USD, for example, you are actually buying euros and selling dollars.
If the pair sells, offers for sale and purchase of the euro against the dollar. So if you buy or sell a currency pair, you are buying / selling the base currency.
The best way to remember just thinking about it as a pair of currency issue.
If you buy … purchase the first currency and selling the second currency. If you sell … you sell your first purchase of foreign currency and the second currency.
This means that they are capable of short selling restrictions in order to make money when the market declines, and when it rises.
The problem with the securities markets or exchanges is that the market should go to make money. In Forex, you can make money in all directions.