The FX Converter and Forex 101

Posted by admin 28/10/2013 Comments are off 782 views

FX Converter and Currency Pairs

This article looks at the basics of forex trading and the use of the FX converter.

When you look at trading on the forex market you need to know about the basics.  There are a number of basics that you have to consider from what forex is to the use of an FX converter.  All of this information should be covered before you start trading.  If you do not learn about the basics before you start trading then you are not going to be able to trade correctly.

What is Forex?

The first question that you should be asking is what forex is.  In order to trade successfully on the forex market you need to understand what this is.  The forex market is the largest and most liquid financial trading market in the world.  It is also where currencies are traded against each other.

The forex market is unique in a number of different ways and you should consider this.  The market is open 24 hours during the week.  This is the only market that is able to do this as it is decentralised.  This means that there is no central exchange that all the trading will need to go through.  All the trading on the forex market is done online through trading platforms.

What are Currency Pairs?

When you trade on the forex market you will be using currency pairs.  To trade forex you need to buy one currency and sell the other as you would with the normal foreign exchange rate transactions.  In order to achieve this on the market all trading is done with currency pairs.  The currency pair will denote the currency that you are buying and the one that you are selling.

The abbreviations that are used for the different currencies are the ones that have been agreed upon by the standards organisation.  It is important that you understand the make-up of the currency pair and which currency you will be buying and selling.  If you do not do this then you could face a number of problems when you are trading.

The Use of the FX Converter

There are a lot of people who want to use the FX converter when they trader.  The fact is that most traders feel that the FX converter does not have a place in trading.  If you are going to be using this device then you have to ensure that it will not negatively affect your trading.  If the FX converter takes time away from other analysis that you should be doing then you should not use it.

How do the Forex Brokers Work?

Another point that you should consider with the basics of forex is how the forex brokers work.  The forex brokers that you use allow you to trade on the market through their trading platform.  These brokers will not charge a commission, but rather a spread on all the trades that you complete.  The spread is the difference in the two prices that you get from the broker.

There are two common methods that are used by retail brokers to determine the spreads.  These are the fixed and variable methods.  Most of the brokers will use the variable method because they are able to cover the costs that they are charged.

 

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