What is Currency Trading?

Currency trading is better known as forex trading, and are done mainly on these principles. Forex trading will generally be done via a broker, who will in return provide you with an additional margin to assist you to trade. Because of this reason many people are able to do currency trading in place of normal capital investments, as you in essence receive assistance to trade more lots than you would normally be able to. Lots are a standardize quantity of a currency pair.

In return for this assistance by the broker they will ask you an amount for each trade you are opting to do. This amount is known as the spread and determined by the size of the lot and currency pair you trade. You will make money from currency trading, though deciding in which direction a specific currency trading pair are moving. This is called the trend trading and called as follow:

Short / Bear market / Sell (all the various names with the same meaning) – You will profit if the market goes down. A bear market is any market that appears to be falling or decrease in price.

Long / Bull market / buy (all the various names with the same meaning) – You will profit if the market goes up. A bull market is any market that appears to be rising or increase in price.

Currency, if done correctly should be done cautiously and always keep the following in mind.

– Always put in a stop loss. This is to make sure that if a trade goes against you, you will be taken out of the trade without losing all your capital invested.

– Always verify your decision to do a specific trade, by about 3 different methods. Once you have confirmation by all, you can decide to either sell or buy.

Hope this article assisted you. Happy trading.

Note: Currencies, Commodities, Cryptocurrencies and CFD’s traded on margin carry a high degree of risk. As such they may not be suitable for all investors. Investors should ensure they fully understand the risks associated with leveraged financial trading before deciding to trade because you can lose some or all invested capital. Investors may choose to seek independent advice and should not risk more than they are prepared to lose.

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