Forex is about global markets, of course, every issue of the world affects the price movement of the pair. When the issue of this kind happen then we can use fundamental analysis, which utilizes data from news releases to forecast where the market trend will move.
"Fundamental Analysis? What is it? "
Relax, Comrades, we do not need to concern about fundamental analysis which we will discuss later. Now we need to do is concentrate on the three currency pairs below and pretend this is what happens..
EUR/USD
In this example, the base currency as well as a base for order buy or sell is the Euro.
If we believe the u.s. economy will continue to weaken and will give an adverse effect on the U.s. dollar, we can execute the order BUY EUR/USD. That way, we have bought the Euro currency with the expectation it would be increased compared to the u.s. dollar.
On the contrary, if we believe the US economy will be weakened and the Euro strengthened compared to the US dollar, the order of execution is what we must SELL EUR/USD. Thus we have been selling the Euro by expectations the currency would fall against the u.s. dollar.
USD/JPY
In the example this time into the base currency at the same time base for a buy or sell order is USD.
If we believe the Government of Japan will weaken the value of the Yen in order to encourage the industrial exports of his country, then all we have to do is execute the order BUY USD/JPY. That way, we have purchased with the expectation value of the US dollar will rise against the Yen Japan.
Well, if we believe investors are pulling their money out of Japan's market to American financial and exchanging all their U.s. dollars back into Yen, making the value of the U.s. dollar slumped. Order our execution to be in this situation is to SELL USD/JPY. As such, we've been selling U.s. dollars with expectations of value of the currency will depreciate against the Yen Japan.
USD/CHF
This time the base currency and of the base to buy or sell order is US dollars.
If we are confident the Franc Switzerland over-valued, then we must execute the order BUY USD/CHF. Thus we have bought US dollars, with the expectation of the value of the currency will rise against the Franc Switzerland.
On the contrary, if we believe the U.S. housing market weakened and will affect the future of the country's economic growth of Uncle Sam, then we should order execution is SELL USD/CHF. That way, we have been selling U.s. dollars with expectations the currency will depreciate against the Franc Switzerland.
Margin Trading
When we go to the supermarket to buy eggs, of course we can not buy a grain of course. At the very least we should buy a quarter or 4 "lot" If the dictionary trader.
The same is true in the world of Forex. We're going to look silly when it said it would buy or sell 1 Euro. Forex trading generally in all currencies traded in the size of the "lots" of 1,000 units of currency (on a micro account), 10,000 units (on a mini account), or 100,000 units (on a standard account). It all depends on the broker and the type of account that we use.
"Woe! I do not have had enough money to buy 10,000 euros! What this means I can't trade? "
Quiet ... we can still trading even though it was unable to buy 10,000 euros. Here's How? By making use of Margin trading course.
Margin trading is a term known in the Forex world for a number of our capital borrowed. With margin trading can we open-position of $ 1,250 or even $ 50,000 with only $ 25 or $ 1,000. We can do massive transactions quickly and cheaply with the small starting capital.
Flash News
As the development of retail Forex trading, some brokers allow traders to transact with a lot of custom. So we don't need a trading account with micro, mini or standard lot. If we, for example, want to trade with 1,234 lots because this is our lucky number, then we can use it!
Rollover
For the open-position on the "cut-off time" our broker (usually on Saturdays at 5: 00 p.m. (EST), or on Sunday at 05: 00 am (GMT + 7)), there is the daily rollover interest rate paid or obtained as a trader. All depends on margins and the trader's position in the market.
If you don't want to produce or pay interest of just simple our position, here's how: (make sure we close-position, and could not spare a single one of the open-position, prior to 5: 00 pm EST, the time of expiry of the Forex market on every week.
Rollover cannot be separated from the Forex trading, for trade (trade) of each currency involves borrowing one currency to buy other currencies.
Interest paid using currency borrowed, and resulting from the currency bought. In short, when the difference between the interest rates of these negative means that we have to pay.
For more information about the details of the rollover, we can ask it at the dealer or broker we are.
Some retail brokers adjust rollover interest them based on some things (leverage account, open borrowing rates between banks).
Below is a table that can help us to imagine the difference of interest rates of any major currency.
Next lesson: Pip And Pipettes, seeds of Forex Profit
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