Although the Forex market is widely known among experienced traders and beginners, a large population still does not know what it is all about or how it works.
If you are a complete beginner and want to know about the best indicators and tips to become a Forex trader, check out the most frequently asked questions below:
What is the forex market?
It is a market not controlled by any institution or country. Likewise, there is no arbitration panel to mediate disputes between traders, nor are clearing houses guarantee trading operations. Each trader trades with another trader through OTC (Over The Counter) agreements.
What commissions are paid?
Most commonly, a trader is accustomed to paying commissions to his agent, the broker, as payment for his services. The broker receives an order from his client (the trader) and tries to execute it in the market, looking for a counterparty.
What is a pip?
The pip is a word that comes from "percentage in point" and is used to refer to the smallest increment that can occur in the price of a currency pair. The price in forex is given as the exchange ratio between two currencies; for example, EUR/USD 1.3000 means that 1 euro can be exchanged for 1.3000 dollars. This price has four decimal places, so one pip will be 0.0001 (1/100 of 1%).
What do you buy and sell in the forex market?
Currencies are traded in the forex market, but the reality is that the retail forex market is purely speculative, and nothing is bought or sold. If a trader goes short on the EUR/USD pair, he has sold euros and now has dollars, but there is no such transaction in physical form. All trading operations arrive at a computer and are offset against each other according to the market price. Profits or losses on a particular trade are recorded in the client's account.
In essence, when a trader makes a forex trade, he sells one currency and buys another, always trading in pairs.
What currencies are traded in forex?
Except those with a fixed exchange rate system, any world currency are tradable in the foreign exchange market. These currencies form the so-called "major pairs" in combination with the U.S. dollar and are the pairs with the highest volume:
What is a carry trader?
Carry trade is a very popular type of trading in the foreign exchange market. It is widely used by both large investment funds and individual traders. The carry trade is based on the spread between the short-term interest rate associated with each of the currencies that make up a given pair. This short-term interest rate is set by the respective Central Bank of the country of each currency.
What is the one-minute scalping strategy?
It is a trading strategy used by scalpers that consist of opening and closing (buying and selling) positions in very short periods of time.
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