Currency Trading Online - Trade for a living, invest for life 
 
 Why not sign up here for Anna's free newsletter  or my FREE live training rooms
 

Learn Currency Trading

Introduction to Forex: - As I said on page one, opening an online tradingcurrency trading forex online with anna account with a broker can be done in minutes using a credit card, and you could be trading currency within an hour. It is as simple as that! You are suddenly trading in a world you know nothing about, and like everyone else, will lose all your trading capital very quickly.  If you wish to take this approach, please do - I would suggest that reading through the rest of the site might save you a lot of money, and may help you to achieve your dream of trading forex full time, as a living. So, if you would like to learn currency trading, then please just carry on reading! It is worth the effort I can assure you.

Currency Trading Pairs

All trades in the currency trading markets are quoted in pairs. The first currency is called the base currency. In world markets the dominant base currency is the Euro, ( not the US Dollar) and so Euro currency pairs will always be quoted with the Euro first. I have provided a table below of the six most widely traded pairs in the forex market. These are know as the majors, as they represent around 75% - 80% of the volumes traded daily.

Symbol Currency Pair % Forex Market Trades
EUR/USD Euro and the US Dollar 28% to 30%
USD/JPY US Dollar and the Japanese Yen 18% to 20%
GBP/USD Pound Sterling and the US Dollar 13% to 15%
AUD/USD Australian Dollar and the US Dollar 5% to 7%
USD/CHF US Dollar and the Swiss Franc 3% to 5%
USD/CAD US Dollar and the Canadian Dollar 3% to 5%

For new or novice traders, these are the pairs that you should start trading initially, as they have the greatest liquidity in the forex market. Some brokers offer up to 120 currency pairs, so you can imagine how small a percentage of the market they represent. These ' exotic' pairs will move infrequently, often with a large gap up or gap down in pricing, since there are insufficient numbers of currency traders in the market to move the prices in a meaningful or consistent way. Please stay away from them, as they will have no liquidity and you will lose your trading capital even quicker!

Currency Trading Pips

Currency pairs move in pips which stands for 'price interest point'. The pip is normally the fourth decimal point of the currency, so for EUR/USD it is 0.0001, but for the USD/JPY it is only two decimal points 0.01. So how much does a 1 pip movement in price represent in dollars? - well that depends on the Forex contract or 'lot size' and once we have that we can work out our profit and loss per pip, which I have put together in the next table for you using the EUR/USD currency pair.

Currency Trading Profits

In currency trading you are not buying and selling real money, but contracts in what is called a lot size. Now lot sizes vary, depending on the type of currency trading account you have and are generally traded in three different sizes, which are shown below, and the table shows the profit or loss from 1 pip movement for each contract.

Lot Size USD Number of Contracts Currency Pair Dollar Value per Pip    
100,000 One EUR/USD 10    
10,000 One EUR/USD 1    
1,000 One EUR/USD 0.1    

So let's put this into context - most of the above currencies will move an average of around a 100 pips in a day. This means that if you trade one standard lot size and get it wrong, in one day you will lose 1000 USD. Easy really. If you trade one micro lot, on the same day you would only lose 10 USD. So as a novice currency trader, trading online, where should you start? - I will leave you to answer that yourself! Let's quickly look at some more basics on the next page on your journey to learn currency trading.

 

Currency Trading Online - Next Page