Learn Forex Market

Foreign Exchange Market simplified as Forex Market. (Also known as FX, Spot, Currency Market).

The Market in which participants are able to Buy, Sell, Exchange and Speculate on currencies are said to be the Forex Market.

What is Forex Trading?

Money is what Trades, it involves in Buying and Selling of one currency against some other currency.

For eg : if you think USD will go up, you can buy USD by selling Indian Rupee.

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Major Currencies based on strength

EUR : Euro (Fiber)

GBP : Great Britain Pound (Cable)

AUD : Australian Dollar (Aussie)

NZD : New Zealand Dollar (Kiwi)

USD : United States Dollar

CAD : Canadian Dollar (Loonie)

CHF : Swiss Franc (Swissie)

JPY : Japanese Yen

Currencies are Traded in Pairs

Example : USDINR, EURGBP, AUDJPY, etc. It represents value of one currency against value of other currency. For Instance,

USD / INR = Rs.65 / 1 US dollar equals to 65 Indian Rupees.

MAJOR CURRENCY PAIRS

EURUSD , GBPUSD, AUDUSD, NZDUSD, USDJPY, USDCAD.

GO RELATIONSHIP PAIRS

EUR/GBP, EUR/JPY, CAD/CHF, EUR/CAD.

CURRENCY CROSS

GBP/JPY , EUR/JPY , EUR/CHF.

GBP/JPY = GBP/USD & USD/ JPY

EUR/JPY = EUR / USD & USD /JPY

EUR /CHF = EUR /USD & USD / CHF

WHO TRADES FOREX?

The Forex Market is made up of Banks, Commercial Companies, Central Banks, Investment Management Firms, Hedge Funds, and Retail Forex Brokers and Investors.

Average Daily Trading Volume

The currency market is considered to be the largest financial market in the world, processing trillions of dollars worth of transactions each day.

Advantages of Forex

Traded 24 hours for 5 days in a week
Most liquid Financial Market
Easily Acessible
No Commissions
No Contract
No one can corner the Market
High leverage
No fixed lot size
User friendly tools and software to trade the market
Free demo accounts

As on 2013 statistics FX Markets move to 5.3 Trillion

Stock Market

8 hours only
Less Liquid Financial market
Need shortcuts
Commissions
Contract
One can corner the Market
Low Leverage
Fixed lot size only
Complicated Software

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FOREX TERMINOLOGY

What is Pip?

Pip stands for “percentage in point” and is the smallest increment of trade in FX. In the FX market, prices are quoted to the fourth decimal point.

Example : EURUSD market price 1.16500

What is Spread?

The difference between the bid and ask price of the currency pair.

Example : EURUSD Bid price: 1.16500 Ask price: 1.16521

Here spread of EURUSD 2.1

What is Volume (Lot)?

A lot represents the standardized quantity of a financial instrument as set out by an exchange or similar regulatory body.

In Forex lot represents by Standard lot (1.0),

Mini lot (0.10),Micro lot (0.01)

What is Leverage (Exposure)?

The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.

Example: 1:100, 1:200, 1:500

TRADING PLATFORM

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How can you make Money in Forex?

Currency pair	USD/JPY	USD/JPY	EUR/USD	EUR/USD
Lot Size	0.1	1	0.1	1
Value of Pip	1.0	10	1.0	10
Actual Margin	10000	100000	11650	116500
Margin(with leverage 1:200)	50	500	58.25	582.5
Margin(with leverage 1:500)	20	200	23.3	233

MARKET TRADING SESSIONS

SYDNEY SESSION	03:30 AM TO 11:30 AM
TOKYO SESSION	04:30 AM TO 12:30 PM
LONDON SESSION	11:30 AM TO 07:30 PM
NEWYORK SESSION	05:30 PM TO 01:30 AM

FOREX TOOLS

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TRADING METHODS

Technical Analysis

It is a method where traders look at the charts to analyze the market movement based on historical charts. Candle sticks and candle stick patterns are the most important component of technical analysis.

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FUNDAMENTAL ANALYSIS

In simple words, Fundamental Analysis is the study of economical indicators of any country. For e-g.: GDP, Inflation, Employment rate, Trade balance, Political stability, Supply and Demand etc.

Fundamental analysis will generally have medium to long term targets andthis is mostly used by investors rather than traders. Hence the analysis by itself can be time consuming.