Here's A Quick Way To Learn How To Trade The Forex

Here's A Quick Way To Learn How To Trade The Forex

by Leo Howland

Interested in becoming a Forex trader?

It is easy to start into the Forex market, using a demo account until you are satisfied with your level of understanding. This will let you test your skill without risking your money in a live transaction.

Before you can start you need to learn the basic terms. Forex is the buying and selling of the different world currencies. If you buy one currency and sell another, you have completed a Forex deal. The Forex market is very large, with an average transaction rate of almost $2 trillion traded daily.

The first step in learning how to trade the forex market is to understand the quotes. A Forex quote is listed as a pair of numbers. The first number is known as the base currency and has a unit value of 1. The second number of the quote is known as the counter currency reflects the value of the counter against the base currency. For example: USD/JPY 109.2 would indicate that one US dollar will buy 109.2 Japanese Yen at that moment in time. As the value of the currencies change the quotes will change to reflect the difference.

Another type of quote is obtained from a currency dealer. The dealer will use a two sided quote which consists of a "bid" and "ask" price. If the quote for EUR/USD is 1.2385/1.2390, this means that the "bid" or selling price of the base currency is 1.2385 while the "ask" or buy price is 1.239. This means you can buy one Euro dollar with 1.239 US dollars. You could also sell one Euro dollar for 1.2385 US dollars. These quotes are always in the currency dealers favor. trader is required to buy the currency at the higher price. The difference goes to the broker which replaces a commission charge to the broker's clients.

This simple explanation of Forex quotes is merely a beginning toward becoming a Forex trader. You can learn much more with on line study, books, and utilizing demo trading accounts to hone your skills.