If you are a trading enthusiast or you are an average person willing to test the deliciousness of trading in Forex, you need to learn about the basics ingredients of Forex. Otherwise, it will be hard for you even at the beginning of trading. In a word, if you don’t know how to work in a kitchen or how to use the kitchen instrument, you can’t cook even an omelet. So, you need some tips from your mom or your elders about the kitchen. In the case of Forex, you have to know about the fundamentals of Forex trading and the key instruments of trading in it. All the master traders will agree with us on this that this is one of the most important precautions for a novice trader to learn the basics of Forex. Today we are going to present before you some of the basic ingredients and tools for trading in Forex.
The first thing you have to know about Forex is there is no single currency to trade for in Forex. You will see that they are in pairs with each other. Like EUR/USD where EUR is the European Euro and the USD stands for United States Dollars. One of these currencies is called the ‘Base currency’ which is the second one in the pair we mentioned earlier (EUR/USD) and the other which is the first one is called the ‘Quote currency’. When you are trading (buy or sell) a currency pair, you are trading the quote currency with the base currency of that pair.
Pip is the magical thing that turns your investment into profit through trading. If you ever looked into a trading platform, you would have seen two numbers look almost. They are the buying price and the selling price for that currency pair. You should know how the buying and selling of a currency pair works. Pip is the 4th decimal number of that price; when a currency pair has YEN (Japanese Yen) in it, the pip is the 2nd decimal number for the currency price. When you are opening a trade and closing it after some time, a significant amount of pip will change for sure. That multiplied by the amount you are buying or selling defines your profit or loss from that trade. These are very basic information about the Forex trading industry. If you don’t learn this by heart it will be almost impossible to make money.
When you buy or sell a trade you are dealing with a certain amount. In Forex that amount is defined as lots. A lot is the 100,000 units of a currency pair which might be too big for a novice trader. That’s why there are smaller lots too for people with the different amount of investment. There are four categories of lots for traders. We have already mentioned the first one a several times by now. A ‘Lot’ is the highest one and the others are the Mini lot, Micro lot and Nano lot. Mini lot of 10,000 units, Micro is the unit of 1000 units and the Nano one is the 100 units of currency. It is the indicator that defines the amount you are buying and selling when you are trading.
As a new Aussie trader you have a lot to learn. The expert in the Forex industry often suggests the new traders go for the paid trading course. The paid trading course will give you an organized structure to learn the details of this market. If you spend money on a trading education you have nothing to lose. In fact, spending money on a paid training program is the best thing you can do as
a trader. As a retail trader never test your luck in this profession since it will cost you heavily. Take your time and learn the details of this market to become a profitable trader.