Orders and Trades
Generally speaking, there are three types of Forex orders:
1. Market order – an order to buy or sell a currency
2. Limit order – an order to capture gains from advantageous market movements
3. Stop order – an order to forego further losses from disadvantageous market movements
If a trader believes the value of a base currency will increase relative to its pair, the trader should place a Market Order to buy the currency at its “Ask” price. However, in order to protect against the risk of significant losses, a prudent trader will simultaneously place a Stop Order to sell the currency if the “Bid” price drops to a certain level. In addition, in order to capture profits, a trader will often place a Limit Order to sell the currency if the “Bid” price rises to a certain level.
In contrast, if a trader believes the value of a base currency will decrease relative to its pair, the trader should place a Market Order to sell the currency at its “Bid” price. However, in order to protect against the risk of significant losses, a prudent trader will simultaneously place a Stop Order to buy the currency if the “Ask” price rises to a certain level. In addition, in order to capture profits, a trader will often place a Limit Order to buy the currency if the “Ask” price drops to a certain level.
Therefore, prudent Forex trading would suggest that every “buy” order be coupled with two “sell” orders; and every “sell” order be coupled with two “buy” orders.
Tuesday, June 23, 2009
Candlestick Charts
Candlestick Charts
A candlestick chart shows how currency pairs fluctuate in relative value over time. The x axis shows time in what ever increment a trader wants to see it. It could be minutes, hours, days or even weeks. The y axis shows the value of one base currency unit relative to the other currency in the pair. The candlestick chart below shows EUR/USD at five minute intervals over four hours.
The body of the chart shows blue and red rectangles - which are the "candlesticks". When the candlestick is blue, it means the value of the base currency has increased relative to its pair in that time interval. For blue candlesticks, the bottom edge is the opening price and the top edge is the closing price in the time interval.
When the candlestick is red, it means the value of the base currency has decreased relative to its pair in that time interval. For red candlesticks, the top edge is the opening price and the bottom edge is the closing price in the time interval.
The thin lines protruding from the top and bottom of the rectangles are called “wicks” or “tails” or “shadows”. They display the high and low prices of the base currency relative to its pair in that time interval.
Most often, we see “Bid” charts – which shows the price of selling the base currency relative to its pair. But a trader can also choose to display "Ask" charts - which show the price of buying the base currency relative to its pair.
Currency Quotes
Currency Quotes
Reading a foreign exchange quote is simple if you remember two things:
1. The first currency listed is the base currency
2. The value of the base currency is always 1
A currency pair quote is comprised of a bid/ask price expressed in the following format:
EUR/USD: 1.2836 / 1.2839 or EUR/USD: 1.2836/39
The first number in the series represents the bid price, the cost of selling the Euro against the Dollar, or going ‘short' on the Euro.
The second number represents the ask price, the cost of buying the Euro against the dollar, or going ‘long’ on the Euro.
The difference between the ask price and the bid price is called the pip spread.
What is a pip?
A pip (or “percentage in point”) is the smallest unit of measure for any currency. In most currencies, this is the fourth digit after the decimal point and is equal to 1/100th of 1% or .0001. So, using the example above (EUR/USD: 1.2836 1.2839), the spread is 3 pips (39 – 36).
NOTE: For Japanese yen, pips refer to the second digit after the decimal point. This is the only exception among the major currencies.
Reading a foreign exchange quote is simple if you remember two things:
1. The first currency listed is the base currency
2. The value of the base currency is always 1
A currency pair quote is comprised of a bid/ask price expressed in the following format:
EUR/USD: 1.2836 / 1.2839 or EUR/USD: 1.2836/39
The first number in the series represents the bid price, the cost of selling the Euro against the Dollar, or going ‘short' on the Euro.
The second number represents the ask price, the cost of buying the Euro against the dollar, or going ‘long’ on the Euro.
The difference between the ask price and the bid price is called the pip spread.
What is a pip?
A pip (or “percentage in point”) is the smallest unit of measure for any currency. In most currencies, this is the fourth digit after the decimal point and is equal to 1/100th of 1% or .0001. So, using the example above (EUR/USD: 1.2836 1.2839), the spread is 3 pips (39 – 36).
NOTE: For Japanese yen, pips refer to the second digit after the decimal point. This is the only exception among the major currencies.
FOREX Basics
FOREX Basics
"Forex" stands for foreign exchange; it's also known as FX. It is the buying and selling of currencies. Unlike stocks or futures, there's no centralized exchange for Forex. All transactions happen via phone or electronic network. Because of this, Forex is among the most liquid of trading instruments. In fact, the daily trading volume of currencies is $ 3.2 Trillion – which is more than all other world market exchange trading combined!
More than 85% of Forex trading volume occurs in the “Major” currencies: US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
In a Forex transaction, currencies trade in pairs. Therefore, a trader buys one currency while simultaneously selling its pair. That is, a trader exchanges the sold currency for the one being bought. So when a trader trades Euro-US Dollar (EUR/USD), the trader is actually exchanging the Euro for the US Dollar or vice versa. And when a trader trades US Dollar / Japanese Yen (USD/JPY), the trader is actually exchanging the US Dollars for Japanese Yen or vice versa.
The chart below displays some major and minor currency pairs and their associated trading terminology.
Symbol
Currency Pair
Trading Terminology
GBPUSD
British Pound / US Dollar
"Cable"
EURUSD
Euro / US Dollar
"Euro"
USDJPY
US Dollar / Japanese Yen
"Dollar Yen"
USDCHF
US Dollar / Swiss Franc
"Dollar Swiss", or "Swissy"
USDCAD
US Dollar / Canadian Dollar
"Dollar Canada"
AUDUSD
Australian Dollar / US Dollar
"Aussie Dollar"
EURGBP
Euro / British Pound
"Euro Sterling"
EURJPY
Euro / Japanese Yen
"Euro Yen"
EURCHF
Euro / Swiss Franc
"Euro Swiss"
GBPCHF
British Pound / Swiss Franc
"Sterling Swiss"
GBPJPY
British Pound / Japanese Yen
"Sterling Yen"
CHFJPY
Swiss Franc / Japanese Yen
"Swiss Yen"
NZDUSD
New Zealand Dollar / US Dollar
"New Zealand Dollar" or "Kiwi"
USDZAR
US Dollar / South African Rand
"Dollar Zar" or "South African Rand"
GLDUSD
Spot Gold
"Gold"
SLVUSD
Spot Silver
"Silver"
"Forex" stands for foreign exchange; it's also known as FX. It is the buying and selling of currencies. Unlike stocks or futures, there's no centralized exchange for Forex. All transactions happen via phone or electronic network. Because of this, Forex is among the most liquid of trading instruments. In fact, the daily trading volume of currencies is $ 3.2 Trillion – which is more than all other world market exchange trading combined!
More than 85% of Forex trading volume occurs in the “Major” currencies: US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
In a Forex transaction, currencies trade in pairs. Therefore, a trader buys one currency while simultaneously selling its pair. That is, a trader exchanges the sold currency for the one being bought. So when a trader trades Euro-US Dollar (EUR/USD), the trader is actually exchanging the Euro for the US Dollar or vice versa. And when a trader trades US Dollar / Japanese Yen (USD/JPY), the trader is actually exchanging the US Dollars for Japanese Yen or vice versa.
The chart below displays some major and minor currency pairs and their associated trading terminology.
Symbol
Currency Pair
Trading Terminology
GBPUSD
British Pound / US Dollar
"Cable"
EURUSD
Euro / US Dollar
"Euro"
USDJPY
US Dollar / Japanese Yen
"Dollar Yen"
USDCHF
US Dollar / Swiss Franc
"Dollar Swiss", or "Swissy"
USDCAD
US Dollar / Canadian Dollar
"Dollar Canada"
AUDUSD
Australian Dollar / US Dollar
"Aussie Dollar"
EURGBP
Euro / British Pound
"Euro Sterling"
EURJPY
Euro / Japanese Yen
"Euro Yen"
EURCHF
Euro / Swiss Franc
"Euro Swiss"
GBPCHF
British Pound / Swiss Franc
"Sterling Swiss"
GBPJPY
British Pound / Japanese Yen
"Sterling Yen"
CHFJPY
Swiss Franc / Japanese Yen
"Swiss Yen"
NZDUSD
New Zealand Dollar / US Dollar
"New Zealand Dollar" or "Kiwi"
USDZAR
US Dollar / South African Rand
"Dollar Zar" or "South African Rand"
GLDUSD
Spot Gold
"Gold"
SLVUSD
Spot Silver
"Silver"
Who wants to be a millionaire
Who wants to be a millionaire who wants to be a millionaire Forex Trading?
Personally, I think it would be useful and can bring you a lot of money in the Forex, foreign trade, and it is not difficult to find money.
But is the day I thought how to succeed in Forex trading? Do you think you will be one day the money from Forex Trading?
Do you know what the situation is now living in the foreign exchange market?
Before deciding to engage in the foreign exchange market, you have to know what is the situation which they now live, and the foreign exchange market, or, conversely, to ensure that the best indicator of the market at this time.
If it were not stable at this time, you can use indicators such as the Asia-Pacific and Europe. You look at yourself, and you are mentally alert and emotionally to this situation? In the foreign exchange market to maintain the pocket begins trading.
These are some tips to getting started in the Forex market with full force only to keep your focus and see the new blogs in this tribute to you
Personally, I think it would be useful and can bring you a lot of money in the Forex, foreign trade, and it is not difficult to find money.
But is the day I thought how to succeed in Forex trading? Do you think you will be one day the money from Forex Trading?
Do you know what the situation is now living in the foreign exchange market?
Before deciding to engage in the foreign exchange market, you have to know what is the situation which they now live, and the foreign exchange market, or, conversely, to ensure that the best indicator of the market at this time.
If it were not stable at this time, you can use indicators such as the Asia-Pacific and Europe. You look at yourself, and you are mentally alert and emotionally to this situation? In the foreign exchange market to maintain the pocket begins trading.
These are some tips to getting started in the Forex market with full force only to keep your focus and see the new blogs in this tribute to you
Subscribe to:
Posts (Atom)
