New_to_FX.pdf - NEW TO FOREX GUIDE 0|Page TABLE OF CONTENTS...

This preview shows page 1 - 5 out of 13 pages.

0 | P a g e NEW TO FOREX GUIDE
Image of page 1

Subscribe to view the full document.

0 | P a g e TABLE OF CONTENTS What is Forex? And Why Trade It? ……………………………. 1 Why Trade Forex? ………………………………………………………………… 3 Putting Your Ideas into Action …………………………………… . 4 The Bulls and the Bears …………………………………………………………. 5 Reading a Quote and Making a Trade ……………………….. . 6 “But I don’t have any euros. How can I sell them?” ……………… 7 Pips, Profit, Leverage and Loss ………………………………….. . 8 What is a “Pip”? …………………………………………………………………… 8 Maximizing Your Trading ……………………………………………………… 9 How to Develop a Strategy ……………………………………….. . 9 What’s Next? ……………………………………………………………………….. 9 Becoming a Knowledgeable Forex Trader …………………………….. 10
Image of page 2
1 | P a g e What is Forex? And Why Trade It? Forex [for-eks] noun 1. Is a commonly used abbreviation for “foreign exchange”. It is typically used to describe trading in the foreign exchange market, especially by investors and speculators. You may not know it, but forex is actually one of the largest markets in the world, with over $4 trillion in average daily volume transacted. This easily dwarfs the shares market. All of the world’s shares mark ets combined average only about $84 billion per day. So, if forex is so big, why have so few people heard of it? The simple answer is you have probably used the forex market before, either directly or indirectly. Any time you take a trip to another country and exchange money, you just made a forex trade. Whenever you buy something in a shop that was made in another country, you just made a forex trade. You paid in your own currency and the manufacturer was paid in a different currency.
Image of page 3

Subscribe to view the full document.

2 | P a g e People trade currencies all of the time, but how can currency be an investment? Here’s a simple example. Imagine that you took a trip from the United States to Europe in 2002. For the trip, you changed your US dollars into euros. At the end of a trip, you typically would change any extra euros back into US dollars. But what if you didn’t? In 2002, one euro was worth about 90 US cents ($0.90). Say that you decided to hold on to 500 euros, and left them sitting in your desk drawer for 5 years. In 2007, you took your euros to the bank and sold them for a 2007 price of $1.40. Since you bought the euros for $0.90 and sold them for $1.40, you made a $0.50 profit per euro. You would have made $250 just because you held on to those euros and had bought and sold at the right time. That’ s a 55% return in 5 years.
Image of page 4
Image of page 5
  • Three '12
  • RatnaDerina
  • Foreign exchange market, United States dollar

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern