Placing a Trade

Placing a trade in the Forex market is simple. The mechanics of a trade are virtually identical to those found in the markets you are trading now. A Forex trade is a trade in which one currency is valued against another.

Symbols to Trade
Forex Symbol Currency Pairs Terminology
EURUSD Euro / U.S. Dollar Euro
USDJPY U.S. Dollar / Japanese Yen Dollar-Yen
GBPUSD British Pound / U.S. Dollar Sterling
USDCHF U.S. Dollar / Swiss Franc Dollar-Swiss
USDCAD U.S. Dollar / Canadian Dollar Dollar-Canada
AUDUSD Australian Dollar / U.S. Dollar Aussie
EURGBP Euro / British Pound Euro-Sterling
EURJPY Euro / Japanese Yen Euro-Yen
EURCHF Euro / Swiss Franc Euro-Swiss
GBPJPY British Pound / Japanese Yen Sterling-Yen
The symbol for each Forex contract is based on the two currencies:
EURUSD = Euro Dollar vs. US Dollar.

Also, each Forex contract is a price for the first currency in the symbol name, quoted in the second currency in the symbol name. In the case of the Euro vs. US Dollar, where the exchange rate is approximately $1.30, it would take USD 1.30 to purchase 1.00 Euro. Each Forex contract covers a fixed number of units of the first symbol in the symbol name, usually 100,000.

Forex exchange rate prices move in fixed minimum price movements called pips. A pip is the minimum price move an exchange rate can make.

Closing out a Position
An open position is one that is live and ongoing. As long as the position is open, its value will fluctuate in accordance with the exchange rate in the market. Any profits and losses will exist on paper only and will be reflected in your margin account. To close out your position, you conduct an equal and opposite trade in the same currency pair.

For example, if you have bought (“gone long”) one lot of EURUSD (at the prevailing offer price) you can close out that position by subsequently selling one EURUSD lot (at the prevailing bid price).

Forex Introduction : Benefits of Trading Forex

ZERO Commissions
When trading Forex with other trader like TradeStation, you pay NO commissions and NO data exchange fees. The cost of trading Forex is determined by the amount derived by the dealers and other third parties from the Bid-Ask spread.

24 Hour Market Action
The Forex currency market is a seamless 24-hour market.

Leverage
Forex trading often allows borrowing leverage up to 100 times your account value. Remember that while leverage can help build profits quickly, it can also produce large, catastrophic losses.

High Liquidity
The Forex market, with an average trading volume of over $1.3 trillion per day, is the most liquid market in the world. This means that a trader can usually enter or exit the market at will in almost any market condition usually without regard to trade size limitations.

Forex Introduction : Interbank

The term INTERBANK discussed in FX terminology simply means ‘between banks and large institutions’ where information is exchanged about the current rate at which their clients or they could buy or sell a currency. However, the term ‘Interbank’ today also means anybody who is prepared to buy or sell a currency. Interbank also implies that Forex is not traded on an exchange like equities and futures. The quoted prices for a Forex are based on information from the top banks and large institutions.

Forex Tips

Here are my tips if you want to play forex trading:

• Please, do some exercise or practice before you plunge in to a real investment.
• Never invest more than you can afford to lose - you will see this almost on every site and e-book, but think about it, allow some money for investment and don't get into this madness.
• When you get your target profit, don’t try to push too hard of your self and want more.
• Just Stop! Sometimes luck did not come in the second try, beside at this time your emotion is higher than your logical.
• Don't be greedy.
• Exit stop loss is important, do not trade without exit stop loss.