Introduction
The education and advanced notions about the market are mandatory characteristics for every person who wants to be successful with FOREX trading online. The number of notions that must be known is huge, and without understanding those terms, you will only be another person losing on FOREX.
Step 1
The FOREX trading online market is like an arena where you can find two sides. The team of people who buy currencies (Bulls) and the team of sellers (Bears). Winning and losing is measured in Pips. What is a Pip? It is a common notion used for FOREX trading online, meaning Percentage Interest Point. The Pip represents the smallest individual unit from any transaction, which is made on the FOREX market.
Step 2
The important players on the market trade with packages or currency lots. As a result of the experience accumulated on the market, they have started to trade with standard lots of 100,000 units of currency. However, as this standard offers limited options to the small and medium traders, the FOREX trading online companies introduced the notion of Leverage. This way, the medium users that doesn’t has the resources to trade with standard lots can trade with mini lots of 10,000 units or less. However, the notion of leverage is risky, as the trader can win or lose important sums.
Step 3
If the FOREX trading online site offers you a leverage of 1:100, then you can control 100 units in the market with one single unit. this way, if you want to trade with a mini lot of 10,000 currency units, you will need 100 units invested and 1,000 units to work with a standard lot of 100,000 units.
Step 4
The FOREX trading online platform also offers useful instruments to maximize your incomes and to limit your loses. The Stop Loss is an order with which the opened transaction is automatically closed when it reaches a certain level of price evolution in the opposite direction anticipated.
Step 5
Let’s suppose you enter a Long position. You will establish a Stop Loss under the price of buying, and if the price goes down too much, the position is automatically closed even if you are not online at the respective period. At the opposite head of a transaction, we can find Take Profit, which is used to ensure the risk. Take Profit ensures the profit, while stop loss ensures limitation of losses in case the market takes an unexpected direction.
Tips
The two orders, Stop Loss and Take Profit are used to ensure the risk in the FOREX trading online market. The market also offers you the possibility to initiate waiting orders. In case the market moves really fast and it can’t deliver a package at the expected price, it will wait until the transaction is possible. For a direct order, there is a possibility for you to buy a certain package at a smaller or higher price than the one expected.
There are other FOREX trading online actions that you can take for effective trading, and it is only a matter of inspiration and education if you win or lose on this market.
