This just simply means that the currency pair is something that is rarely traded or spoken about in mainstream financial circles. A buy limit is used to by below the market and a sell limit is used to sell above the market. What I find even more questionable, is why do these ‘buy only’ investors sell their assets when they know the market is going to go down, but don’t do anything else to profit from the move? NZD If account is denominated in another currency (ie AUD) and USD is the quote currency (EURUSD) You think to yourself: “That took me a week to earn that money, now it’s gone in two days!”. Example: You have a 5000 USD account and go long 25 000 EURUSD (.25 lots): Pip Value = 0.0001 x Units When RSI is above 70, a forex currency pair is considered ‘overbought’ and when it’s below 30, it’s considered ‘oversold’. When you’re trading forex, you have many more options at your fingertips to take advantage of trading opportunities, both now and in the future, than just simply buying and selling at the current market price and we go through your options here. Chart Patterns – Continuation We go into more detail on moving average trading in the next section. For example, AUD/USD is currently trading at 0.7230 and is trending upward. Both economies and markets want stability and there is no point in experiencing huge booms if they are followed by equally as devastating busts in a regular business cycle. This means you could be left with only a few dollars in your account. Conversely, the bullish divergence signal coincides perfectly with the actual bottom. But there can be slight differences. It’s not uncommon for good news to send a country’s currency falling like a stone. Most scalping strategies for example, require large amounts of leverage, even when they are only risking 1 or 2%. This is where forex traders utilize what is known as leverage. This adds a whole other element of risk to stock traders that forex traders don’t have to worry about. Most professional traders on the other hand, will tell you this is far too much risk for a single position. Sometimes when talking to other forex traders you might hear a reference to a nickname that you don’t understand. RSI is telling the forex trader to buy even though the currency pair has just broken below the late February lows. All you need to trade forex is a computer, an internet connection and a mind that wants to learn! An example of this would be risking 2% on a long AUDUSD position, whilst simultaneously risking 2% on a long NZDUSD position – if the USD surges, you will be stopped out of both positions simultaneously, and lose 4%. If on the other hand, you think that price will reverse when it hits a certain price, you can use what is called a limit order. Think of leverage as your broker lending you the $100,000 so you can trade standard lot sizes. Now work out the return for the following year! Vantage Group of companies is authorized and regulated in various jurisdictions. Going Long and Going Short A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other but in different currencies. Some card transactions are processed by Vantage Global Prime LLP. In Forex, currencies are actually quoted and traded in pairs, hence the name currency pairs. Can I make money from swap in Forex trading? The two seek each other out through their banks and come to an agreement where they both get the cash they want without having to go to a foreign bank to get a loan, which would likely involve higher interest rates and increase their debt loads. A cross-currency swap is an agreement between two parties to exchange interest payments and principal denominated in two different currencies. Are you ready to take the next step in your forex trading? Here we can see the different parts that make up a forex currency pair. Next we have the 50% mark, note this level is important as it coincides with former support. Shouldn’t a move be a move? Great, simple right? Forex traders are always trying to stay one step ahead of their competition so market sentiment, or where the market thinks that the fundamentals are going to send price, is actually much more important than the release itself! FX swaps can also involve interest payments, but not all do. The purpose could be to hedge exposure to exchange-rate risk, to speculate on the direction of a currency, or to reduce the cost of borrowing in a foreign currency. You’ve been trading a demo account for a while now. You can open an account and begin trading forex with as little as a $100 deposit. If the carry is negative, it is subtracted from your account. Vantage FX is a leading regulated Forex broker offering traders around the world access to global markets. Pip Value = $2.50 / .9915 / AUDUSD Of course we’re talking about using indicators. For example, the bid price for AUD/USD is currently at 0.7228 and the ask price is at 0.7230. What is Forex? Leverage however, is a double-edged sword: with great profit potential, comes the potential for large losses. This is too much for our trader; he finally cuts the trade at the lows, losing 150 pips. It’s important to note that just because a security is overbought/oversold, does not mean it’s going to reverse – Indicators can read overbought/oversold for extended periods of time. So that everyone in the market has a level playing field when it comes to market sensitive news, each economic data release has a set time and date that it must be released. The thinner lines extending beyond the body are called ‘Wicks’ – above the body is the high and below the body is the low for the selected time period. AUD Candle patterns often indicate a turning point or reversal in the forex market, so we’ll break this section up into ‘Bearish Reversal Candles’ and ‘Bullish Reversal Candles’. Candlestick Chart: A currency swap is a foreign exchange transaction that involves trading principal and interest in one currency for the same in another currency. Bear Flag – Bearish Continuation Pattern: CAD Let’s use the EURUSD as an example to show how swaps work: if a trader shorts on EURUSD by 1 standard lot on a Thursday, and keeps the position open overnight, closing it on Friday, the Swap short is calculated as follows: 100 000 (the size of 1 Standard Lot) x (0.01 x 0.0001 pip) = $0.10. The list goes on forever. First we will cover buying and selling in “Going Long and Short”, then we’ll move on to ‘Lot Size & Leverage’. Note that there is a slight pause between this exit signal and the bearish divergence signal. These could be central banker or politician comments, unexpected good or bad economic news or even something as wacky as a new life changing invention! Now what? Short Position: (10 x +0.50) + (-0.04 x 10) + ((10 x 98.50 x -0.002 x 1)/360) = +$4.59. With the latter two, the trader risks holding on to a losing position for longer than necessary and is sacrificing reward. Now that you are familiar with forex trading, you can start going in-depth into the topic and learn more about how forex trading works in excruciating detail. This is done to ensure that all dealings take place in a fair and professional manner. US Dollar / Swiss Franc (USD/CHF) Trade Oil on MT4 with the leading, regulated broker, Vantage FX.