Three Important Forex Concepts For New Traders.
By Adrian Pablo, Thu Dec 8th
As you enter the world ofForex you will find yourself learning and using many newconcepts that you may not have used or heard before.
Three of this important concepts that you must understand arewhat "Pips" are, What "Volume" is and what you do when "Buying"and "Selling Short". They may look more like four concepts butBuying and Selling are like the two faces on the same coin so wecan consider them as a single concept.
Lets first introduce what Pips are. Maybe you have heard or readalready how many pips a day you can make using some tradingsystem. In short, currency pairs prices will go out to 4significant digits. For example; if one currency pair is tradingfor 1.3451 then an increase to 1.3452 would be a "one-pip"increase in the price of this particular currency. This is anincrease of one hundredth of a percent of the value of thecurrency pair you are trading. And depending the type of accountyou have, regular or mini, each pip will have a value of $10 or$1. So if you make 10 pips a day with a regular account youwould have made $100 and with a mini-account $10.
Now we can talk about the Volume; trading Volume is a quantitythat tells traders how much money is being traded at oneparticular moment. And the forex market is known by its highvolume of trading during
most of the time markets are open. Sometimes there can be spikes in the volume during some type of newsbreaks and during the time New York stock exchange is open. Thevolume of transactions in Forex, even in a slow day, will alwaysbe much higher than the volume traded in other large exchangesat their full capacity.
Now maybe the most obvious of the concepts. Buying refers to theacquisition of a particular currency pair to open a trade.Selling short refers to the selling of a particular currency toopen a trade. When you Buy, you are expecting the price of thecurrency pair to increase with time, i.e., you buy cheap to sellhigh. In the case of Selling short, it looks a bit morecomplicated. Here the way to make money is to initially sell acurrency pair that you think will lose value in a given periodof time and then, once it happened, you will buy it back at thenew price but now you can sell it at the previous greater pricethe currency had when you opened the trade, so you earn thedifference in prices. I know it seems kind of tricky, but onceyou are in front of your trading station it will look muchsimpler.
Understand well these three concepts and you will start withsolid steps you trading career.
About the author:Adrian Pablo is a freelance writer with articles published in anumber of places. Get a free report on Fibonacci Trading andlearn more about the world of trading , visit:
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