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FOREX

Forex Start.

So what is Forex? This is an abbreviation of the phrase FOregion EXchange, which translated to English means "foreign exchange." If you ever went to a bank or exchange office and buy \ sell any currency, then you are already involved in trading on Forex. This is just a simple example of foreign exchange transactions, and as you know, a real Forex trading is a serious process.

A simple example: there is a company which imports goods. To purchase goods abroad, it needs money of the country that produces this product. In this case, the company enters the international foreign exchange market and buys the amount of currency, which it needs.

Despite the fact that such processes take place throughout the world and in different volumes, exchange rates are constantly changing.

The price of the currency, however, like any other commodity, is conditioned by the law of supply and demand. So if a large number of people and companies want to buy Swiss franc, its value will grow and the exchange rate against other currencies will change. In other words, we buy a certain amount of any currency, holding her in his until the price change, and then communicate back, but by changing the price. So we get the income from the transaction. Any trader can use this principle to produce profits. This is the trade in the market Forex.

If we consider the online trade in Forex, you can see a lot of benefits. The most important thing is that you can make any transactions without leaving home. Directly from your computer or any other device that has an Internet connection. Moreover, the Forex market is open round the clock on weekdays, which may be considered by you as no basic salary and additional, in their spare time. More to the main positive aspects include the one that you do not need to have huge amounts of money to get started in the market. Enough will have minimum deposit funds and gradually increase them.

Despite the seeming simplicity and ease, should understand that the Forex market cannot make you rich in a moment. But it can provide you with a constant additional income and may become your main business. Everything will depend on how much time you'll be ready to invest in this business.

Forex. Terminology.

The very first concept which must meet a novice trader, the concept of a currency pair. If we take any product, whether it is gas, oil, stock, etc., then the concept of the price of this product is easy to understand, because the price of one. For example, if the price of gas costs, we understand that the rate per cubic meter of gas if the oil - per barrel, etc. When it comes to Forex, is worth the price alone, and the two currencies are shown. Such a situation for the first time can be misleading. So, any pair consists of two currencies. The currency that stands in the first pair is called the base, and the second - quoted. The cost quoted currency expresses the number of units of the second currency needed to purchase one unit of the base currency. Let's look at the concept of a currency pair on the example of the most common pairs - EUR / USD. When you trade currencies, you buy one currency (in this case EUR), for a certain amount of another currency (in this example USD). Suppose the price of the currency pair EUR / USD is currently 1.30000. This means that for 1 EUR you will need to pay 1,30000 USD. Simply put, this price is how much of the second currency you will have to pay to buy 1 unit of the first currency. The expression "the strengthening of the US dollar" means that to buy more of EUR, you will need a smaller amount of USD. But in the currency pair EUR / USD, the US dollar is the currency of the second, so the price of this pair will decline.

Price Change currency is measured in points. The Forex market is a huge amount of currency, so for a more accurate display of the prices after the decimal point more digits. Some brokers taken to indicate the 4 digits. So the pair EUR / USD is 1.2967. Figure 7 in this number and will be one point (PIP). Company WIT Ltd, is one of those brokers that measure more accurately the price. Therefore, in the value of the above 5 digits and the last digit in the quotation is called fractional points or pipette (PIPETTE). It is necessary, just to note that apart from all the currencies considered Japanese Yen JPY. In currency pairs with her point is the second digit after the decimal point, and pipette - the third. This is due to the fact that the yen has a low cost relative to all major currency pairs.

In the process of trading, you will be faced with such a notion as the spread. This commission is payable to the broker for the conduct of any trade. In fact, the difference between the price at which a broker you buy the tool and the price at which he sells this tool. On the example of the pair EUR / USD: if the price is equal to 1.30000 per pair that does not mean that you can buy it from a broker at this price. Most likely the broker will

ask you for her price is slightly higher, for example, 1.30010. And if you want to sell, the broker you set the price lower - 1.29990. The difference between these figures is 2 points. These 2 points are spread. Broker not just takes you spread. For this commission he finds you the most advantageous price for the transaction. So the best price at which a trader can buy a broker tool at a given time is called the BID and the best price for sale broker tool called ASA.

Now watching the price just in numbers, quite a difficult task. Therefore, in the world of trading to assess changes in prices made use of graphics. They are used in technical analysis. Everything is simple. The horizontal axis we delayed the time and the vertical - price. To display the graph itself, as a rule, use a line graph or bar graph, but often candlestick charts. From the candles you can glean some information. So just by looking at the color of the candle, you can determine the direction of prices, i.e. the price rose or fell. Candle automatically changes color depending on whether it is bearish or bullish. Just over a candle can determine the highest and the lowest price for a certain time. Just on Japanese candlesticks can see what the price was at the beginning of the time interval and at the end. Candlesticks can be presented in almost any time interval. So, on the minute chart, each candle is formed every minute, per hour - every hour on the monthly - every month, etc. Many traders use for transactions candlestick analysis.

In order to convey the information to the broker about what you want to buy or sell, how much you want to do when you commit the profit or loss, are used trading platform. In fact, this program through which you give the broker orders. Such programs, there are many, but the most common MetaTrader4. More details about the program can be found under "Trading Platform" in "Education" on our website.

In trading, the subject of the transaction are called instruments or assets. For example, if the transaction currency pair EUR / USD - it is a tool. When the transaction for gold, gold instrument stands etc.

Making any transaction on the asset you open a position. This process is sometimes referred to enter the market. When the trader out of the market - he closes the position.

In order that would minimize your possible losses in trading, there is such a thing as a stop-loss. By definition, this order will automatically close your trade when the price reaches a certain level (usually a maximum price of damages provided for each individual transaction). Suppose you bought a tool, and its price began to fall. Theoretically, you could lose all the money on your deposit. What would this do not happen, put a stop loss. Take PROFIT - is the target level of the transaction, ie the price at which you decide to withdraw from the deal to take profits. Orders stop-loss and take-profit should be determined before the date of entry into the market.

Often among traders can hear expressions such as "I opened a long position" or "I am now in a short position." What does this mean? Long positions - is to buy a financial instrument, and a short position - is the sale of a financial asset.

                                                                                                                       

Forex. Broker

One of the most important moments in the beginning of trading way is to choose a broker. Let's start with the fact that we define for themselves who is a broker? Broker, in fact, is an intermediary between the buyer and the seller, the place where people come to both buyers and sellers to complete transactions with each other. Originally broker called the man who had called trader and gave the order to buy or sell a financial instrument. Now, in times of high speed Internet and software development, the interaction takes place through a broker trading platform that simplifies and accelerates the process of trading. Just brokers are suppliers of liquidity to traders.

 

 

There are many brokers and each has its advantages and disadvantages. The most common type of brokers are dealing centers. They act counterparties and transactions that you open when you make a deal, they buy or sell a tool and not a third party, which the broker sends your order. Another type of broker provides direct access to the market. These brokers get quotes from many providers of liquidity and provide their traders. Under this scheme, the counterparty in a transaction in the financial market acts as a third party, and not the broker.

Forex Luck.

To succeed in trading on the foreign exchange market should be well versed in many things. The main ones are technical and fundamental analysis. Technical analysis is a method for the analysis of price changes on the graph to determine the change in the behavior of prices. Under the category of technical analysis can be summed and candlestick analysis, which is also an integral part of technical analysis. To help with the technical analysis of various indicators come, divergence, and more. Fundamental analysis also includes the study of economic performance of different countries to determine their impact on the currency. When traders begin to understand the relationship between the national economy and its currency, there is a high degree of certainty can determine the behavior of the currency.

 

 

 

A key principle in the work of the trader's money management rules are or how often they are called, - risk management. The main methods of risk management are stop-losses, broken transactions into several smaller, analysis of the ratio of profits to the risks. Once you have mastered these techniques, you can avoid losing your capital and maximize profits. In an environment of professional traders believe that the risk should not exceed 1.5% of trading capital on each trade. Adhering to this principle, you can easily protect your account from losing streak and secure trading using leverage.

Another key to successful trading is the trading psychology. What would be a successful trader must deal with such qualities as fear, greed (greed). Requisitions them you increase the chance to become a successful trader. The main thing to stick to your chosen trading strategy and not deviate from it not to happen at this point in the market. Trading discipline - the key to success in trading.

In addition to the above, you need to learn how to analyze your transactions have already taken place. First, you need to have a log of the trader where to celebrate their transaction causes to enter the market, analyze the causes of success or failure of the transaction. It is also worth not ring-fenced, and to be active in communicating with other traders, share experiences both positive and negative, to attend thematic forums, etc.

                                                                                                                       

Forex. Foundation.

As already mentioned, a fundamental analysis is based on an analysis of various economic indicators. There are certain economic indicators, in terms of which the traders can track the effect of the economy. Some of these indicators are the reports. Reports can be published as government agencies and independent institutions that collect data and analyze them before publication. Various reports are published at regular intervals. Reports can be weekly, monthly, quarterly and annually, depending on their species. Particular attention is paid to the latest data traders in each report, as well as to any changes that have occurred over the last analyzed period of time. A strong economy is more likely to provide an opportunity for business (funds, real estate, industrial production). Therefore, if the report shows the economic growth, investors (domestic and foreign) are more likely to want to find an investment opportunity in this country. To invest in the country, the investor will need to do this in the local currency and, accordingly, the demand for local currency will rise, and hence increase the value of the currency.

Also, if some of the sectors of the economy is strong (manufacturing, agriculture, financial services, etc.), then this country will export their products or services abroad. Consumers of these goods and services will have to convert their currency into the currency of the country of manufacture, respectively, the higher the demand for these products, the higher the demand for local currency. Therefore, the price of the currency will rise.

Before the release of economic reports, there are various assumptions about the results of these reports. Traders buy and sell currencies on anticipation. If the expected positive results of the report, traders try to buy the currency before the release, thereby forcing a price increase. This motion is called in trading "Price-Ying", this means that by the time the news of the price has changed in line with expectations. When the output data with the alleged expectations, the impact of the news on the price movement is minimal. But if the results of the report are very different from those anticipated, it will force traders to cope with new unexpected results, which leads to price volatility maneuver.

 

 

 In order to keep track of when will this or that or the news report, the trader used economic calendar. Example economic calendar you can see in the "Analytics" on our website. The initial reaction in the currency markets to the news can be highly volatile. This is due to the fact that large financial institutions are trying to avoid entering the market during major news and cover short positions ahead of the news. Because of this, the liquidity of the instrument is reduced. After the release of the data with any serious reports (for example, a report on the creation of new jobs, excluding the agricultural sector in the USA (US non-farm Payroll)), the price of an asset can fluctuate greatly in different directions, making trade very difficult.

All the economic indicators can be associated with a particular industry in the country (retail, manufacturing, housing complexes, and others.), And with the economy as a whole (GDP, inflation, unemployment, etc.). All changes that show these indicators are very interesting for traders as affect the cost of the currency of that country.

One of the key indicators of the economy is the interest rate established by the Central Bank of the country and use it as a tool of economic management. Raising the interest rate applied to the containment of inflation, and its decline, conversely, to stimulate growth. High interest rates are an indicator of a strong economy. With high probability, countries will be of interest to investors and they will make their money into it, thereby increasing the value of the currency of that country. High interest rates also means big profits with capital that you keep in the bank accounts. Everything works exactly the opposite at low interest rates (except Switzerland).

Inflation, by definition, measures the rate of growth of prices for goods and services for a certain period of time. Increasing inflation means that prices began to rise rapidly, people will spend their income too quickly, and it will have a negative impact on the economy. If inflation falls, or is held in place, it means that prices are rising more slowly. This is a sign of economic stability. If the country is experiencing deflation, and prices begin to fall, it can be a negative signal to investors, they think that the economy is weakening and begin to transfer their capital. Thus deflation may also adversely affect the value of the currency.

Thus, central banks through interest rates, inflation adjusted.

We reviewed the main economic indicators. But there are many other equally important indicators. These include indicators such as GDP, unemployment rates, sales in the primary and secondary housing markets, retail sales, a change in the balance of foreign trade, and others. Each of these indicators requires careful study and may differently affect the attractiveness of the economy for investors, and accordingly the value of the currency.