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Learn How To Trade Forex And How Does It Work

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Forex trading in simple terms is the trading in currencies from the different countries against each other. Learn How to trade Forex and How does it Work. – PowerPoint PPT presentation

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Title: Learn How To Trade Forex And How Does It Work


1
Learn How To Trade Forex And How Does It Work
2
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

3
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.

4
  • 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.

5
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6
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.

7
  • 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.

8
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.

9
  • 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.

10
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11
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.

12
  • 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.

13
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.

14
  • 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.
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