Basics of Currency Trading

Currency trading is a very interesting market to deal with. For those who are interested in speculation this is one hell of market to be attached with. It is also a highly profitable market. Though a speculative market it has certain trends and patterns which when studied properly will make you win lots of trade. When dealt with properly it will help you make high profits and therefore a good investment opportunity.Usually what takes place in FOREX trading is the exchange of currency in pairs which is the item of a trade. The trading instrument is actually the ratio of one currency to the other. There are around 6 to 7 currencies traded commonly of which the leaders are US Dollar, Euro and Pound. Since trading takes place in pairs of currencies one currency is always slated with the other. The currency slated together forms the base currency and quote currency or counter currency. The trading is valued with the amount needed to obtain unit of one currency with other. The instrument is actually the rate of exchange over one currency to the other.In currency trading the usual jargon used are the bid price and ask price. Bid price stands for the price. The bid price and ask price are the common quotes for currency pairs. The bid price is the price which the agent is ready to buy the currency and the trader should sell to trade. Similarly the ask price is the price the agent is ready to sell for the trader to buy. The minimal value of one trade is termed as pip.Unlike other business a trader need not invest the whole amount he is trading for but only a margin of the amount. Here the broker puts in the entire amount. Before getting into trading one has to learn and understand lots of things. These are the basics which will help us trade successfully. There are lots of complexities involved in trading unless we understand it properly all we will be doing is mere speculation and what turns out will be shear luck. But once we learn the basics we will know what we are doing and how it is going to affect our investment.

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