Forex basics

Saying Forex basics is simple is partly correct. Saying Forex baiscs is complex is also partly correct. The area between the two is directly related to the volatility of the currency market at any given time. It’s both exciting and dull. It’s both winning and losing. It’s a lot of different things to different people but if you are a beginner, what you really need to learn and understand is the Forex basics. Here is a look at a few of them:

Determining Currency Value

The simple explanation is that the value of one currency is determined through comparison with another currency through an exchange rate. So, in order for this to work currencies are traded in pairs. The first currency in the pair is the base currency with the second one being the counter currency. When you buy a currency pair the base currency is being bought and the counter currency is being sold. When selling a currency pair you are doing the opposite.

There are major currencies that are typically trading the most in Forex include the Euro (EUR), United States Dollar (USD), Japanese Yen (JPY), British Pound (GBP) and the Swiss Franc (CHF). These currencies traded as pairs will often be matched like this: EUR/USD, USD/JPY, GBP/USD and USD/CHF.

What really makes Forex trading most interesting is that there is no central exchange involved. In other words, there is no possible way that a certain center can influence the exchange rates and ‘take over’ the market. What this means is that thanks to decentralization traders can access several different brokers in order to place trades. Think over-the-counter style trading.

Where this may be of most interest to you is that the Forex market is designed just for traders like you. That’s even truer if you are a beginner. You can enter the market with access to everything the big players have and make trades alongside them. You don’t need special membership, have a certain number of sponsors or a string of MLM people below you. Everyone is allowed to play in this playground and that is what makes it most attractive to newbies.

Tools For Trading

The educational tools that a trader uses help him or her to make smart decisions with their trades. What makes this even more valuable is that the Forex market never sleeps. It’s a lot like Vegas minus the Elvis Tribute artists and lavish shows. Trading takes place around the clock thanks to sessions hosted in Europe, Asia and the United States. There are also overlapping sessions which can prove to be very exciting times for traders.

Sound Like Something You’d Be Interested In?

Forex trading is not for the faint of heart. You will not get rich quick and you will take some hits. However, the more you know about the basics, the better prepared you will be when you need to close a position and understand the timing of doing it now instead of later. Timing is huge in Forex. But so is education. The more you are well aware of the Forex Basics, the better trader you will become.

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