The forex market is the biggest market in the world and where it differs from stocks and shares is the fact that it is the trading of one currency against another. Stocks and shares are just the value of a company rising or falling dependent on how well they are doing or expected to do. The value of a currency must be valued against another for instance the pound becoming weaker against the dollar, hence currency is set out in trading pairs.
There are many different trading pairs but the most traded are the majors and 6 of those major trading pairs are traded against the USD (U.S.dollar). The currencies in those six groups are as follows; AUD (Australian Dollar), EUR (Euro), GBP (British pound), CAD (Canadian Dollar), CHF (Swiss Franc) and the JPY (Japanese Yen). When working with these forex trading pairs they are set out as follows; AUD/USD, EUR/USD, GBP/USD, USD/CAD, USD/CHF and USD/JPY.
As you will notice the first three trading pairs have the USD as the second currency in the pair and the last three have the USD as the first currency in the pair this is quite significant for when a trader has his charts set out ready for trading. All six forex trading pairs are set out in chart formation in a block of six three on the top row and three on the bottom row. The top row will consist of AUD/USD, EUR/USD and GBP/USD; the bottom row will consist of USD/CAD, USD/CHF and USD/JPY.
When a trader has established this chart set up it can be easier to see the currency markets as a whole and each trading pair can give tell tale signs to what another is doing. A perfect example of this is the EUR/USD and USD/CHF which in the correct chart set up should be above and below each other. These two trading pairs almost exactly mirror each other, which can be helpful in deciding a correct entry point for either of the two currencies. If the EUR/USD was looking like a good entry point but the USD/CHF was just about to hit a large psychological number the chances are it will stop the EUR/USD as well.
The different forex trading pairs also have different degrees of volatility as well, The GBP/USD being the most volatile and the USD/JPY being the least volatile. When starting out in the forex market it is wise to avoid the more volatile GBP/USD until you have some experience in the market as it is not uncommon for this currency to have violent short term swings in its trends.
Adam had been trading forex for 4 years with little success. Adam originally had no knowledge of the forex markets so he joined Colin Atkin's private members club. Colin is a professional trader who shares his trading live, over a webinar three times a day 5 days a week, all you have do is copy what he does and take the profits. Since Adam joined Colin he has had the money to invest in other projects and gone on to be a successful full time forex trader and internet marketer.
Article Source: http://EzineArticles.com/?expert=Adam_Woods
7 comments:
Almost 90% of the part time traders that I know of want to become full time forex traders in the near future. And they hope to be professional traders one day. That is the dream for most forex traders. What about you? indicator mt4
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The most important activity that is involved is the buying and letting out of foreign currency. convert $99.99 For these reasons, it is not always an easy path to become a forex trader.
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