Basics of Online Forex Trading

As any other kind of trade, online Forex trading is aimed at gaining maximum profit from buy/sell operations. Each trader wants to buy currency at the lowest price and then sell it at maximal rate. The difference is what he gets as a profit. Currency is also a good with its own price, supply and demand. These characteristics are very changeable, their values depend on huge number of various economic and social factors. Successful online Forex trading is based on ability to predict how this or that factor can influence the currency price in future. Predicting profits helps to make correct investments of existing funds.

When user comes to Forex for the first time everything seems very unclear for understanding, as all activity is described in codes. However a short time required to get used to it if you know the basic principles of Forex language. For instance, each currency is represented by a special code. It is a unique three letter code like USD for United States Dollar or EUR for euro. The list of currency abbreviators can be found at any online user guide, you can always check them if needed. The currency rate is described as a pair of currency codes. For instance, EURUSD shows the price of Euro in US dollars. If you meet a quote standing EURUSD=1.39, this means that you will need 1.49 $ for buying 1 Euro.

As is already known online Forex trading is built on rate moves. That is why you should track any moves in rates of the currency you purchased. If EURUSD became equal to 1.50 instead of former 1.49, this means that US Dollar has depreciated by one point, while Euro has appreciated by one point. If the chart of one specific currency goes up, it means that this currency grows in price while other becomes cheaper with respect to it. Trading on some local currencies is always risky as it is very difficult to define it absolute price due to its rate instability. US Dollar, Euro or British Pound are one of the most stable currencies and online Forex trading is usually concentrated around them.