Forex Review – Trading Revealed

With an estimated daily sales of nearly 2 trillion dollars, a total which actually dwarfs all of the world's stock markets, Forex has turned into the largest financial trade market in the world.
What is Forex market trading? Well, a simple Forex review will show that it is an electronic market, with transactions taking place via the internet or telephone, which takes care of currency trade with no fixed exchange. Once the purview of large financial institutions, more and more individuals are now taking advantage of Forex tips and trading in this over-the-counter market.
Using the currency pairing of EUR/USD (Euro's over US dollars) as an example, it is necessary to understand that these currencies are always dealt with in tandem. The Euro's in this example is known at the base currency, whilst the US dollars are the counter currency.
So what does this mean in terms for the Forex market trade? Well, taking a look at the pairing, it is the amount of counter currency which is required to purchase one unit of the base currency. So, again in this example if you were to acquire this pair, the deal would be broken down as you acquiring the Euro's whilst concurrently selling the US Dollars. On the other hand, were you to sell this pair, you would be selling the Euro's and purchasing the US Dollars.
A simple forex tip is to think of the pair of currencies, whichever are being used, as one single unit and not as separate items. So, if the market suggests that the Euro will strengthen against the US Dollar, you acquire the EUR/USD pair. If, by reading Forex signals, it looks as if the opposite will happen and the Euro will weaken, then you would sell that very same pair.
Studying the trade in hard numbers, which can be done via Forex trading software, you will see two numbers. For example, keeping with the Euro's over US Dollars Forex demo, you may see 1.3461/1.3466. The first number will be the cost of the bid, the cost at which traders on the Forex market will be prepared to purchase Euro's against the US Dollar. The second number would be the offer price, indicating that for those who are fixed to sell the Euro against the US Dollar, that is the price they would receive.
The difference between the two prices, the bid and the offer is known as the spread. A new trader studying a Forex review will learn that the spread between two currencies is typically ranging between 3 to 5 pips. What are pips? Pips are a Forex coined-term relating to the most typical increment in currencies. For example, if the Euro's above increased from 1.3461 to 1.3462 then that adjustment on the last decimal place of the number (with four decimal points being quoted on most currencies), would be acknowledged as a single pip.
A forex review of traditional trading techniques, establishes that deals are done via lots, which can also be specified as being contracts. A relatively recent new introduction to the Forex market trading has been the mini lot, which has a limit of $10,000, and has become a popular alternative to the standard sized lot which is $100,000.
For the new trader, $300 would open a mini account with most Forex brokers, who typically offer 1% margins. So when trading a mini lot, you would need a margin of $100, which is then the controlling factor of the $10,000 mini lot. What does that mean in terms of making profit? Well, if you traded your $10,000 mini lot and the currency gained 1% then your return would be $100. In other words, you would match 100% of your original margin.
The options for day trading on the Forex market can prove to be very profitable. With the common need of controlling a standard sized lot requiring at least $2,500 to open the account, a Forex tip for a newcomer would be to trade with just the mini account for a length of time. Once trading of your first mini lot has accrued $100 profit for instance, then you can turn to moving ahead and trading with two, gaining valuable Forex tips and experience to start trading with standard lots.