MarilynWindham766
The world of forex trading differs considerably from trading of other financial instruments and commodities. Forex currency trading is considerably not the same as stock, bonds and futures trading. Understanding the basics of this marketplace is very important for any trader to learn in the market.
The largest Financial Market: The daily trading volume of the currencies market exceeds 4 trillion $ $ $ $ by far it's the largest financial market exists in the known universe. The major players of the market are banks including central banks. They execute the majority of the big transactions of the market. The retail traders contribute a small sector from the market, but the contribution is growing swiftly over the years because of the ever increasing popularity of forex currency trading.
Twenty-four hours a day Trading in Sessions: The world currency trading marketplace is open 24 hours a day from Sunday evening to Friday evening GMT. But the transaction volume in intraday trades show great variations because there are three major trading sessions as Asian session, European session and North American or US session. It comes with an overlapping of Asian and European sessions as well as European and US sessions in which the trading volumes can be very high. And, there is a considerable gap between US session close and the oncoming of Asian session in which the trading volumes can be very low. The currencies of nations in the particular region are most traded once the regional session is open.
Over-The-Counter Trading and Currency Pairs: Currencies are traded in pairs. It's possible to buy a currency by selling another. The cost relation between your two currencies is the exchange rate or even the cost of the happy couple and is priced up to your fourth decimal point. The tiniest price change easy to a pair is called pip and it generally equals 1/100 of 1% of the exchange rate. The trades are executed over-the-counter meaning directly between the buyer and seller; there aren't any centralized exchanges or regulatory bodies for forex trading.
The Three Types of Lots as well as their effects on the stock market: Forex trades are performed in lots. Presently there are three kinds of lots open to retail traders as standard lot, mini lot and micro lot. A standard lot may be the position size that equals $100000, a mini lot equals $10000 and a micro lot equals $1000. When trading with standard lots, a pip difference in price can cause $10 profit or loss. Similarly with mini lots the same can cause $1 change and with micro lots a 10 cent ($0.10) change. Also it should be noted that the accessibility to the types of lots varies with broker as most brokers only offer standard and mini accounts.
Typically the most popular Currencies: Although there are hundreds of currency pairs available for trading, a majority of volume is contributed by only 18 currency pairs made up of eight most widely used currencies. These currencies include USD (US Dollar), EUR (Euro), GBP (British Pound), JPY (Japanese Yen), CHF (Swiss Franc), CAD (Canadian Dollar), NZD (Nz Dollar) and AUD (Australian Dollar). Retails traders also prefer these currencies as they are most liquid.
