Forex Trading Guide - 10 Tips You Need to Know Before Joining Foreign Exchange Trading
With the worldwide enthusiasm in online forex trading or foreign exchange trading, who knew this business would take the world by storm? Forex trading is not as complex as you think it is. If you are new to the business you are just a few steps away to learning more. However, there are some things like terms you need to familiarize yourself with. Below are the 10 tips you need to know before joining foreign exchange trading.
- Automated Online Forex Trading Account - The online account you create once you found a forex broker to whom you can invest a small amount of money to begin trading.
- Standard Lot - It is the lot you need to start with. This pertains to any currency you have. It represents 100,000 of any currency you now hold. If you are using USD a standard lot is $100,000.
- Economic Indicator - You must be aware of the clues, data and other indicators that the economy of a certain country is doing well or not. This is often affected by market conditions.
- Spread - The spread pertains to the difference between two prices according to the currency pair; the ask price and the bid price. It is constant regardless of fluctuations in the market.
- Price Action - This is the actual movement of price from moment to moment. This refers to the random movement of price depending on the forex time frame.
- Resistance - This is a technical trading term which refers to the lines on your chart that restrict a rise in the current price of a certain currency.
- Support- This initially is known as a resistance line, however, if the current price during the trade overlaps the resistance line it become the support line.
- Leverage - Leverage means controlling something large with limited or small resource. Using leverage provides traders the opportunity and capacity to make large trades with a limited amount of money. This is also similar to using margin in forex trading.
- Liquidity - to liquidate means to quickly convert your assets into cash. It is also the trader's capacity to buy and sell a pair of currency.
- Forex Trading Platform - a software used by you and sent by the broker for you to be able to join forex trading online. This is a system where you can manage your online account.
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