The Basic 2 : Trading FOREX

What is trading forex?

Why you should traded?

The quick answer is MONEY. In forex, you’re not buying anything physical. Think of buying a currency as buying a share in a particular country, its kind of buying stocks of a company. The price movement of the currency is a direct reflection of what the market thinks about the current and future health of a certain country’s economy.

A simple way to understand, say, if you buy  the Pound Sterling then you are basically buying a “share” in the U.K economy. You are asuming that the U.K economy is doing well, and will even get better in the future. Once you sell those “shares” back to the market, hopefully, you will end up with a profit. In other words, the exchange rate of a currency versus other currencies could be a reflection of the condition of that country’s economy, compared to other countries’ economies.

Forex trading is the contingously market where people buying of one currency and selling another. They  are eventually traded through a broker or dealer. Curency are traded in pairs; for example the Pound Sterling and the U.S. dollar (GBP/USD) or the Pound Sterling and the Japanese yen (GBP/JPY) etc.

The Basic 1 : What Is Forex ?

I'm not a Forex Mentor, but here is a brief definition for you about forex. Let’s said, you are American and went to United kingdom. In the U.K airport, you might find a currency exchange booth at the airport, also you might seeing a screen displaying different exchange rates for different currencies. And then you exchange the money ( $USD) you have into pound sterling (£ GBP). You do that and basicly you’re participated in the forex market! In other words, due to forex terms, assuming you’re an American visiting U.K, you’ve sold dollars and bought Pound Sterling.

Forex, or FX a.k.a foreign exchange market is the largest financial market in the world. Compared to the measly $22.4 billion a day volume of the New York Stock Exchange, the foreign exchange market looks extremely large with its $5 TRILLION a day trade volume. The largest stock market in the world, the New York Stock Exchange (NYSE), trades a volume of about $22.4 billion each day. Now, forex market brought to your home. You can participated into forex market as long as you  haveinternet connection. Online forex trading became a huge industri nowadays and who knows, you can taking advantages on it.

Before you jump into the forex market, it is a good idea to do some research. Learn about forex, join international forum and forex international clubs that opening discussion about forex, surf internet, find the community.

Just remember the rules, greed when other fears and fears when other greed!

Forex Indicator : Moving Average

Basic Moving Average Learning

Moving average  (MA) is a trend following indicator. Moving average is widely used by traders in the world because it is versatile and easily constructed. It indicator for follow trends in the movement of a currency. Moviing average identify and signal to a technical trader that a new trend, a sustained movement either up or down in the currency, has begun or that an old trend has ended or reversed. It is easier to see using a moving average is that it acts to smooth the volatility inherent in looking at the price action alone to recognize trends.

Moving Average could shows you the average price in the period of time.  Moving Average of different types (Weighted Moving Average (WMA), Exponential Moving Average ( EMA) and Simple Moving Average (SMA) ) differ from each other only in terms of weight coefficients, which are assigned to the last data.

The basic to use moving average is to just plot a single moving average on the chart. When price action tends to stay above the moving average, it would signal that price is in a general uptrend and if price action tends to stay below the moving average, that indicated downtrend.

Here is the illustration: 

The red line is Moving Average. Price action represented by candlestick chart, tends to stay above the red line (Moving Average). In this case, we can say that current trend is uptrend ( bullish).

Some trend followers use this indicator to make forex forecasting and made decision. Is it that simple? The answer is NO. This only basic used of moving average. The fact is, you need to practice use this indicator in different terms and sometimes you need to set up more than one moving average on your chart in order to provide more qualify signals.