The Basics of Currency Trading

Trading is a tough task and there are times when the investor can end up losing money. But this is also one of the best ways to get good profit and all that you need is practice and an understanding of the market trends. In trading, it is important to have good knowledge, correct information, and experience.

Keep in mind that the growth of the currency market which is also known as the Forex market is tremendous. The currency trading platforms are improving and you find that many professional and retail traders soon become a part of this currency market.

Understanding the working of Forex trading:

This is important to understand the working procedure of Forex Trading. This is a kind of trading that takes place round the clock but this market is closed from Friday evening to Monday evening.  There are European, Asian, and US trading sessions. There is overlap in the sessions and the trading of the main currencies happens during those hours. In some of the sessions, certain pairs of currencies have more volume.

Understanding the concept of pairs and pips:

Unlike stock trading in the case of currency-trading, the trading has to be done in “pairs” which means that you have to buy one currency and sell another currency in the market. On the other hand, Pip is also an important aspect of currency and it stands for percentage in points and this is one of the smallest increments of trade.

The trading of currency is done in lots and these are of different sizes. A micro lot has 1000 units of the base currency, a mini lot has 10,000 units of the base currency and a standard lot has 100,000 units of the base currency.

In the case of retailers or beginners, the trading is done in micro-lots because the pip factor here is smaller and in case of adverse situations the losses that one has to bear are less and these losses are easier to manage for the retailers and small traders.

Fewer products in Forex trading:

The number of products is less in the case of Forex Trading as compared to stock trading. Thousands of stocks are present but the pairs of currencies are only 18. Amongst the pair of currencies, the major ones are the US dollar (USD), Canadian dollar (CAD), euro (EUR), British pound (GBP), Swiss franc (CHF), New Zealand dollar (NZD), and Australian dollar (AUD) and the Japanese yen (JPY).

Trading in currency is not all that easy but since there are few products this trading is easier and it is also easy to manage the portfolio as compared to stock trading. Many stock traders are today taking a keen interest in the currency market. The supply and demand affect the currency market in a big way. Factors like interest rates and geopolitical conditions are also some of the aspects that have an impact on Forex trading.

Some interesting information about trading in currency:

Forex is the short form of Foreign exchange and the trading as already mentioned is done in pairs and which means that a currency is exchanged for another currency at a given rate. The base currency is mentioned first and the next one is the quote currency or the counter currency.

Interested in entering the arena of Forex trading?

Forex trading is a lucrative option but you need to trade carefully and you have to take all the pros and cons into account. So, if you are not very sure how to go about in the case of Forex trading then it is better to connect with an experienced trading expert who can provide all the support that you need. For more information about Forex trading check the website http://www.thefxkey.com/ and connect with their experts to get in-depth information about the concepts like currency trading.