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Free Forex Trading Beginners Course

What You Need To Know To Start Trading

Are you thinking of dipping your toe into the world of Forex trading but not sure where to start? Do you know what currency quotes are? What about technical indicators? Learning about economic data can be a bit intimidating, so taking this course will get you started on a better understanding, by explaining the language and terminology as well as the process.

It is essential to know the fundamentals of Forex trading carries significant risk, and gaining the experience to trade currency safely takes time. The course material will introduce you to the markets and improve your understanding of elements like Pips, Lots, Margin and Leverage, together with how to read and use a variety of chart patterns.

Having this knowledge and more, before you start trading, offers you a distinct advantage. Designed in an easy-to-follow sequential manner, the aim is to introduce you to all the necessary information in a simple, straightforward way. So, you can start your Forex trading better prepared.

What To Expect From This Forex Trading Course

Part 1: Reading A Currency Quote
Part 2: What Are Forex Pips, Leverage, Lots, And Margin?
Part 3: Explore Currency Pairs And Their Different Aspects
Part 4: Fundamental Analysis And Technical Analysis In Brief
Part 5: The Use Of Forex Technical Analysis
Part 6: The Importance Of Fundamental Analysis For Forex
Part 7: You Need To Apply Some Psychology To Be A Successful Trader
Part 8: Finding The Best Forex Broker Online
Part 9: Disclaimer

Part 1: Reading A Currency Quote

Just to set the scene, Forex trading is a venture into the commodities market. This is where traders buy and sell assets, such as gold or oil, in exchange for currency. In contrast, it is the currencies themselves that are the commodities that are traded in the Forex market.

One of the differences that can be seen is that commodity trading can be viewed in absolute values, due to it only being traded in US dollars. However, in Forex trading, the value to the currencies is relative, for example, USD can be valued in Euro or Yen. For example, you are trading in crude oil; the price is set in US dollars, an asset class with its own value, creating a quote where the oil is defined by the dollar price, which is an absolute value.

This is not the situation with Forex trading as you cannot put the same value on each currency. So you can trade in USD with Euro or Canadian Dollars, all value indicators. Each of these can be valued by each other, not allowing for an absolute value, but one in which its relationship to the other determines each currency’s value.

Currency Quotes – what they are and what they mean

Having selected your Forex broker and downloaded their software, one of the first things you will encounter is the Forex price quote. When an exchange of currencies is undertaken, the quote is the price that this occurred at. Simply stated, the currency or Forex quote is the history of the previous transactions where a currency pair was exchanged.

Let us examine this with an example.

  • GBP/AUD 1.742

The above number represents the value at which the currencies displayed will change hands. GBP, Great Britain Pound, on the right, is the base currency being used to buy. Australian dollars on the left, AUD, is the quote or term currency that is being sold. Meaning in this example, AUD is the trader’s base currency in which profit or loss will be measured.
So, this numerical quote indicates the trader buys 1 GBP when the value of that equals 1.74 AUD, the amount that has to be paid to buy the currency.

Making this transaction puts the trader into an ‘open position’, meaning they are long in GBP which was purchased, and short in AUD which was sold. To make a profit in Forex Trading is the same as in any other type of trading – buy cheap, sell high! So, the wait then begins for the GBP to rise above the price paid of 1.74. Once this occurs, the trader can close their position by selling the GBP and buying back the AUD, making a profit.

Let’s take a look at two examples.

  • GBP/AUD 1.742

Here, a trader buys 1,000 GBP for 1,740 AUD, then waits for the quote to rise to 1.75. Then he can close his position by selling the £1,000 and receiving $1,750. He will make a profit of 10 AUD, this being the difference between the first trade of 1,740 AUD being sold, and the final trade of 1,750 AUD being received back.

  • USD/EUR 0.874

Here the trader buys 1,000 USD with €0.874 and waits until the quote improves to say 0.890. He then sells, to receive €890 – a profit of €16.