Learn How To Trade Forex And How Does It Work

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Learn How To Trade Forex And How Does It Work
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Index

1. Learn How To Trade Forex
2. Why Is Leveraged Forex Trading Popular With
   Investors?
3. How Does Forex Trading Work?
4. Buying
5. Selling

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Learn How To Trade Forex

• Forex trading allows you to speculate on the
  changes in the currency strengths over time,
  buying or selling and currencies trading one
  against the other.
• Forex traders seek to profit from the variations
  in the exchange rates between currencies,
  speculating on whether one currency's value, like
  the pound sterling, will go up or down to another.

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• The foreign exchange market is the most traded in
  the world, making it a highly liquid and dynamic
  market.
• The high market liquidity implies that the prices
  can change rapidly in response to news and
  short-term events, building multiple trading
  opportunities for the retail forex traders.

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Why Is Leveraged Forex Trading Popular With
Investors?

• 1. Trade on rising and falling markets
• Trade in falling markets as well as rising
  markets.
• 2. Leveraged product
• Use the small amount of money to control the
  larger position.
• 3. Volatility
• Currency prices are constantly fluctuating with
  each other offering various trading opportunities.

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• 4. 24-hour trading
• Not restricted to the physical exchange hours.
• 5. Liquidity
• The Spreads tend to remain tight meaning your
  dealing costs will remain low.

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How Does Forex Trading Work?

• Forex is always quoted in pairs, regarding one
  currency versus another.
• For example, USD/GBP the fluctuations in the
  exchange rate between those are where a trader
  looks to make their profit.
• The first currency is the one that you think will
  go up or down against the second currency.

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• When the trading currencies, you can think of the
  future direction of the market, taking either a
  long (buy) or short (sell) position depending on
  whether currencys trading value will go up or
  down.
• Forex price movements are triggered by the
  currencies either appreciating in the value or
  depreciating.

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Buying

• When trading currencies, you buy the currency
  pair if you believed that the base currency would
  strengthen against the counter currency, or the
  quote currency weaken against base currency.
• So, if we think that the Euro will strengthen
  against US Dollar, then we place a buy trade.

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• For every point or pip, the Euro rises against
  Dollar, and we will make a profit.
• It is important to recognize that the price of
  the euro weakens against the US Dollar, and we
  would make a loss for every pip it falls.

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Selling

• Alternatively, you would sell the currency pair
  if you believed that base currency would weaken
  in value against counter currency.
• If we believe the Euro decrease in value against
  the US Dollar, we place a sell trade, and for
  every pip, the Euro falls against US Dollar you
  make a profit.

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• Should the value of the euro rise against dollar
  then you make a loss for each pip it rises.
• Leveraged trading means you can put up the small
  amount of money to control a much larger amount.
• It means you can leverage money further, but it
  means that losses will be magnified as well, so
  you should manage the risk accordingly.