Forex Tutorial: Currency Trading Summary
  1. Forex Tutorial: Introduction to Currency Trading
  2. Forex Tutorial: What is Forex Trading?
  3. Forex Tutorial: Reading a Forex Quote and Understanding the Jargon
  4. Forex Tutorial: Foreign Exchange Risk and Benefits
  5. Forex Tutorial: Forex History and Market Participants
  6. Forex Tutorial: Economic Theories, Models, Feeds & Data
  7. Forex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies
  8. Forex Tutorial: Technical Analysis & TechnicaI Indicators
  9. Forex Tutorial: How To Trade & Open A Forex Account
  10. Forex Tutorial: Currency Trading Summary

Forex Tutorial: Currency Trading Summary


While this online forex tutorial only represents a fraction of all there is to know about forex trading, we hope that you've gained some insight into this topic. We also encourage those of you who are interested in potentially trading in the online forex market to learn more about the complexities and intricacies that make this market unique.

Let's recap:

  • The forex market represents the electronic over-the-counter markets where currencies are traded worldwide 24 hours a day, five and a half days a week. The typical means of trading forex are on the spot, futures and forwards markets.
  • Currencies are "priced" in currency pairs and are quoted either directly or indirectly.
  • Currencies typically have two prices: bid (the amount that the market will buy the quote currency for in relation to the base currency); and ask (the amount the market will sell one unit of the base currency for in relation to the quote currency). The bid price is always smaller than the ask price.
  • Unlike conventional equity and debt markets, forex investors have access to large amounts of leverage, which allows substantial positions to be taken without making a large initial investment.
  • The adoption and elimination of several global currency systems over time led to the formation of the present currency exchange system, in which most countries use some measure of floating exchange rates.
  • Governments, central banks, banks and other financial institutions, hedgers, and speculators are the main players in the forex market.
  • The main economic theories found in the foreign exchange deal with parity conditions such as those involving interest rates and inflation. Overall, a country's qualitative and quantitative factors are seen as large influences on its currency in the forex market.
  • Forex traders use fundamental analysis to view currencies and their countries like companies, thereby using economic announcements to gain an idea of the currency's true value.
  • Forex traders use technical analysis to look at currencies the same way they would any other asset and, therefore, use technical tools such as trends, charts and indicators in their trading strategies.
  • Unlike stock trades, forex trades have minimal commissions and related fees. But new forex traders should take a conservative approach and use orders, such as the take-profit or stop-loss, to minimize losses.

  1. Forex Tutorial: Introduction to Currency Trading
  2. Forex Tutorial: What is Forex Trading?
  3. Forex Tutorial: Reading a Forex Quote and Understanding the Jargon
  4. Forex Tutorial: Foreign Exchange Risk and Benefits
  5. Forex Tutorial: Forex History and Market Participants
  6. Forex Tutorial: Economic Theories, Models, Feeds & Data
  7. Forex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies
  8. Forex Tutorial: Technical Analysis & TechnicaI Indicators
  9. Forex Tutorial: How To Trade & Open A Forex Account
  10. Forex Tutorial: Currency Trading Summary
RELATED TERMS
  1. Purchasing Power Parity - PPP

    An economic theory that estimates the amount of adjustment needed ...
  2. Currency

    Currency is a generally accepted form of money, including coins ...
  3. Markdown

    The difference between the highest current bid price among dealers ...
  4. Catalyst

    A catalyst in equity markets is a revelation or event that propels ...
  5. Investing

    The act of committing money or capital to an endeavor with the ...
  6. Transfer Risk

    The risk that a local currency cannot be converted into the currency ...
RELATED FAQS
  1. How is the value of a pip determined?

    A pip in foreign exchange trading is a measure of a price movement in a currency pair. "Pip" is an acronym for price interest ... Read Full Answer >>
  2. How do I implement a forex strategy when spotting a Triple Top Pattern?

    Because the triple top is a highly reliable reversal pattern, it lends itself nicely to the creation of an effective trade ... Read Full Answer >>
  3. How important a metric is PPP (purchasing power parity?)

    Macroeconomic analysis relies on several different metrics to compare economic productivity and standards of living between ... Read Full Answer >>
  4. How do I use software to make arbitrage trades?

    Traders use software programs to detect arbitrage trading opportunities they can take advantage of for potential profits. ... Read Full Answer >>
  5. What is arbitrage?

    Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. ... Read Full Answer >>
  6. What is finance?

    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center