Q&A: Currency and Foreign Exchange

Here are answers to some common questions about currency and foreign exchange trading.

21. November 2024 by Clickinsider / Forex Trading

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What is Forex and currency trading?

Forex trading is all about buying and selling currencies, so as to achieve a profit (make money). Forex stands for Foreign Exchange, but the phrase "currency trading" (ie foreign currency trading) is also used for the same concept.

What is a Forex broker?

A currency broker (forex broker) is a service equivalent to a bank that helps individuals and companies to trade currencies. Most Forex brokers usually offer services such as graphical charts and real-time quotes, which is useful when to trade currencies.

Why you need to provide personal information to your currency broker?

A currency broker is a bit like a bank. They are legally required to ensure that the customer who opens an account currency is actually a real person. To document this above authorities if they imposed it, they then have all your paperwork in order. Since most Forex brokers is foreign, it is even more stringent documentation requirements for you, then you are a customer from another country, in their eyes. Therefore, in many cases, send a copy of your driver's license / passport, copy of a recently dated bill (utility bill, rent, cell phone bill, etc.) and you must provide your date of birth and full name. You can be assured that this information is handled in a safe way if you choose serious and responsible foreign exchange broker.

What is pip / pips

said a peep, many pips. PIP stands for Percentage In Point. In currency trading is 1 pip = 1/100 of 1%. This easy to understand when you begin to trade currency, then the currency is priced to four decimal places in most cases.

What is the spread?

Spread is the difference in the number of pips between the buying price and the selling price.

When opening and closing the foreign exchange market?

Unlike the stock exchange and the stock exchange market has a much longer hours. You can shop anytime from Sunday at 22:00 and until Friday at 22:00. The foreign exchange market does not close the afternoon, because it is an international market where there may be large movements throughout the day.

What is backtesting?

When you trade currency is smart to have a system that displaced or you when to buy and when to sell. That way you have a frame that determines your actions, to avoid analyzing every single trade over the system states is needed. Backtesting is to test this system for foreign backwards in time, ie looking at historical exchange rates and market data to determine if the system can be effective. In other words, a way to check if your system has the potential to be viable until you try it.

What is foreign exchange scalping?

Scalping in forex is all about exploiting volatititeten in the currency market. Scalping is a kortsitig strategy, and takes place in only a limited period of trade, the duration is usually from a few milliseconds up to one to three minutes. Scalping is often combined with a higher leverage (gearing / leverage). All currency brokers featured on this website offer high leverage if desired.

Can I trust my Forex broker?

This is like asking: Can I trust my bank and it is a subjective question rather than a factual question. We have extremely good experience with the Forex brokers that we have featured on this site and got a grade higher than 7 points (out of 10 possible points) - these chairs at least we, at least as much as we rely on local banks.

What affect exchange rates?

Exchange rates are influenced by a wide set of parameters. Reported data showing increased unemployment in one country can weaken a currency in the country, while a prompt recovery in GDP (gross domestic product) can strengthen the currency. The interest rate is also an important indicator of a country's currency, so right before and after this adjustment will often affect the exchange rate.

There is MUCH that determines which direction the exchange rate moves. Should the crown down today? Will the U.S. dollar go up during the year? The answer is an analysis, but for God's sake, do not use statements made by analysts in the media as the basis in your own currency. Forex must be learned, not based on other people's knowledge.

Can you get rich in forex trading? / How much money can I earn?

Of course it can! Some of the world's wealth would not have been possible without speculative projections in the currency market. Forex trading can make you richer in many ways, and we think it more than just in terms of money. Currency trading an incredibly exciting to engage in foreign exchange transactions, either as a hobby or on a professional level.

It is not possible to estimate how much you can earn on Forex. The more money you bet, the more you can potentially earn. Knowledge and experience in currency trading is important, but if you do not dare to invest enough money, you'll never make big either. You must be willing to spend money to make money, if you want to succeed and get rich in forex. You can of course start with a smaller amount, but sooner or later you have to bet if you want to make money on line with the professional trade clean that trades currencies. You can earn millions (and billions), the question is: Are you interested to try and learn, and how much are you willing to bet?

Forex has enriched our daily lives in terms of money but also in other ways: Foreign exchange trading provides a sense of happiness to master something that is still somewhat exotic, it has given us new and relevant knowledge, keeping the brain in shape, you will get a more realistic perspective on the macro economy and society as a whole, and the excitement is palpable on.

course you can get rich on the money when you operate with foreign exchange trading, but the intellectual rewards are also very valuable. Not everything money can buy, but the currency is likely to give you rewards in both "worlds".