Trade Invest Profits Rewards
BASIC GUIDE: KEY TERMS AND PHRASE USED IN FOREX TRADING
Before starting seriously into a ⓘFOREX business, the understanding of basic forex is very important. This business is very interesting and not surprisingly there are many people decide to become a forex trader.
They are seeks opportunity to make huge profits income through it, so there are many ways used in FOREX trading.
SUMMARY OF FOREX TRADING
Foreign Exchange known as FOREX is a non-investment or schemes, but it is a Currencies business trading is in pairs e.g EURUSD, USDJPY etc.
In the early stage, Forex trading initially running by banks and investment institutions.
Because this business requires substantial capital investment millions of dollars.
At that time only those companies, individuals and bank centers which has a strong financial background are allowed to trade Forex. 100,000usd = Regular Account Mini Account = 10,000USD”.
Since 1996, the influence factor on the Internet and the world economy transition, the Forex Broker or Company started open widely for small traders and offering the “low deposit account” as low as 1USD by introducing the Leverage.
As of today, the major commercial banks and central banks around the world remains FOREX as a major source of income.
LEARN BASIC FOREX FOR ONLINE INCOME
DIFFERENT TYPE OF FOREX TRADING
SPOT : Trader to buy or sell currencies at the same time.
FUTURE : concept 1 agreement buy/sell a currency in the future that have agreed, whether within a month, 2 or 3 months. * will not be covered in this article.
BETWEEN FOREX AND SHARES.
- Currency Trade market 2-way (up or down chart)
- Trade within 24 hours a day and 5 days a week.
- Seller & Buyers unlimited
- Sell & Buy is simple
- Trade within few currency only.
- Trade Stocks.
- One-way Market.
- Working Hours only.
- Buyer Seller & Some difficult for sale.
- there are thousands of stocks.
USE OF TRADE CURRENCY
|MAJOR||USD, EUR, GBP, CHF, JPY, AUD & CAD.|
|MINOR||Beside of Major Currency above.|
TYPE AND CHOICE OF CURRENCY PAIR
||A Pair with USD. 4 most traded are:
||Currency do not pair with USD as:
EURJPY, EURCHF, GBPJPY, EURGBP, etc).
PROFITABLE TIME TRADE FOREX
• 24hrs a days and 5 days a week;
• 5am Monday (Malaysian time) : Opening market 8am in Sydney.
• 9 am (Malaysia time): Opening Market Tokyo.
• 4 pm (Malaysia time); London Market open.
• 8 pm (Malaysia time): New York open market.
Market rotation will continuously open until it closed at 5am Saturday, Malaysia time (5 pm Friday New York time). Saturday & Sunday market is closed and resume on Monday.
The market price movement to be very active during convergence time, Get Yourself Familiar!!!.
USE OF LEVERAGE
In Forex trading 1 Lot = requires 10,000USD for mini account and 100,000USD for a standard account.
An entity in the form of temporary lending rate from brokerage companies for small capital trader.
The available Leverage ratio of 1:1 1:100, 1:200, 1:300, 1:500, 1:1000.
Example 1: if trader selects the account leverage 1:100 and deposit 100 USD, then it has a chance to open tranx with a total available of 100 x 100 = 10,000 USD.
By the time of closing of the offering (closing trade), Leverage credit will automatically closed (back to Broker), the guarantee amount fixed on account of trader as well as the entire profit.
The larger of Leverage will provide large loans to you & the risk is also greater.
Therefor, the use of large leverage require “the right money management”.
In fact, individual trader can do Forex trading directly at Banking’s desk without going through or not dealing with Forex broker, nevertheless the capital & charges imposed by the bank are very high and without Leverage.
With the availability of leverage from brokerage companies everyone can perform Forex transactions with the small capital. “
UNDERSTAND USE OF MARGIN
A capital MARGIN required to trade.
Margin requirements for calculation of lot size while depending on Leverage.
No trade can be opened if the margin balance is insufficient.
It is important to know margin management to avoid continued losses.
DEFINITION OF SPREAD PRICE
Difference price between BUY [ASK] & SELL [BID].
The difference was wage services to brokerage companies that provide account, payment gateway & etc.
Small spreads offered by Forex brokers, it’s more profitable for Traders.
SELL Position is at BID price, when it closed according to the price position at ASK price (BUY).
BUY Position is at ASK price, when it closed according to the price position at BID price (SELL). For Sell position as opposite.
CALCULATION UNIT OF PIP
A pip is a very small measure of change in a currency pair in the forex market. It can be measured in terms of the quote or in terms of the underlying currency. A pip is a standardized unit and is the smallest amount by which a currency quote can change, which is usually $0.0001 for U.S.-dollar related currency pairs, which is more commonly referred to as 1/100th of 1%, or one basis point. This standardized size helps to protect investors from huge losses. For example, if a pip was 10 basis points, a one-pip change would cause more extreme volatility in currency values.
If the open position BUY Eur/Usd priced at position 104.0000. Once the price rises & closed at 104.0020. The difference 104.0000 & 104.0020 = 20. Then 20 profit is called pips.
If the open position BUY Eur/Usd priced at position 104.0000. Once the price down and closed at 103.9980. The difference 104.000 & 103.9980 =-20. Then 20 is loss called pips.
MEASURE OF LOT SIZE
• Meaning, all transaction in the forex market value calculated according to the amount of lots.
The currency traded in the form of Lot for uniform market price. Value Lot depending on the account type.
Standard=1 lot equals USD 10,
Mini = 1 lot equals USD 1,
Micro=1 lot equals USD 0.10
• value of lot different from brokerage companies.
• Influence the amount of each PiP profit.
1Lot = 1USD, then 10Pip x 1USD = 10usd
1Lot = 0.10 USD, then 10pip x 0.10 = 1usd.
DEFINITIONS OF BEARISH
The symbol of the decline in the movement of price-Chart. it means the currency in front (base)=weakened, while currency behind (quote) ENFORCES. If the purchase for QUOTE : it is SELL SHORT.
DEFINITIONS OF BULLISH
The symbol of the movement of price-chart enhancements. It means Currency BASE strengtheninG & QUOTE currency is weakened. If the position of the purchase for BASE currency: it is BUY LONG.
TRADE ORDER INSTRUCTIONS
Generally Buy and Sell are available. 2 types of order order for each transaction as follows:
i. Instant executions : Order (buy or sell) conducted & executed at the current market price.
II. Pending orders : is an Entry order that was not yet executed, thus not yet becoming a trade until it reaches certain point / price (in other words the price booking) Pending order is divided into 4 types of instructions:
1. Buy Stop: Entry order above current price, when aspects of the movement of prices shows tend to continuously moves up. The position of the PURCHASE will be executed automatically, when price reaches the point “BUY STOP”. It “Profit” after prices continue to move up after point “Buy Stop”.
2. Sell Stop : Entry order below the current price, when aspects of the movement of prices shows tend to continuously move down. The position of the PURCHASE will be executed automatically, when price reaches the point “SELL STOP”. “Profit” after prices continue to move down after point “Sell Stop”.
3. Buy Limit: Entry order below the current price, when aspects of the price movement tend towards a reversal (bounce-up) at certain price. “Profit” when the price moving up upon touches entry point “Buy Limit”.
4. Sell Limit: Entry order below the current price, when aspects of the price movement tend towards a reversal (bounce-up) at certain price. “Profit” when the price moving up upon touches entry point “Sell Limit”.
DEFINITIONS OF STOP LOSS (SL)
The instructions which is set by a trader to close position automatically to minimize losses of trade, whenever price against entry direction. A good practice to have this in every single open position.
DEFINITIONS OF TAKE PROFIT (TP)
The instructions in closing “opened position” automatically, when reached specified price. A compulsory to have this in every single open position but most scalper trader not using it.
WHAT IS SWAP OR ROLLOVER TO GAIN PROFIT AND CUTTING LOSE
An interest or commissions or charges to transfer positions that are still open to the next day (overnight).
Example SWAP on USD/JPY
- Quarter Interest Rates: USD = 5.25% & JPY = 0.5%
- If buying currency pair USDJPY, means borrowing JPY thus saving in USD, so the trader get interest:
- -0.5% + 5.25% = + 4.75%
- If, SELL USD/JPY, means the trader will be charged fees if rates interest:
- -5.25% + 0.5% =-4.75%
- interest rates also calculated based on the total value of the volume of lot (in contract size) and not from the capital. Interest is calculated starting from Monday to Friday (open position), * on Wednesday-Thursday rate of interest is calculated 3x higher (up to a total of 1 week is = 7x Interest).
*For Muslim trader, please choose swap free account to avoid RiBA. kindly refer to your brokerage companies terms and regulation.
ANALYSIS FOREX MARKET ON CHART
Chart or Graphic to analyst price movement before opening a position (Sell/Buy). Divided into:
ⓘFUNDAMENTAL is a based on the economic news.
ⓘTECHNICAL is a based on “indicators” such a technical Classic & Modern.
PROFITABLE STRATEGY FOREX
An “intermediate” between BANK TRADER and by providing a “trading account” and “platform”.
• IMPORTANT MESSAGE : Learn and Identify the BROKER before you join them, to avoid issue or missing your capital
TRADE FOREX REQUIREMENTS
Listed below those basic forex requirement on hardware and software for profitable trading.
Great! As of now you got the understanding a basic forex trading works . it is the time for you to find a GURU!!! or you can proceed further on the next article below.