View Full Version : New to currency trading???
Hello men,
I'm new to investing in Currency Market. I've traded stocks and futures but never Currency Market. I have a query. Is Currency Market trading basically the exact same thing as trading futures and stocks but your just buying another currency together with the U.S. dollar?
For example let us say I think that the euro will depreciate. Would I take the U.S dollar and buy Euros or am I pairing two differenct currencies? If I'm pairing the currencies what should the U.S dollar drops and the Euro drops too.
I'm somewhat confused about currencies.
It seems confusing. Do I basically have to predict both markets. If I am buying the euro and selling the dollar, what if the dollar and euro both appreciate, can this occur??
Is everything basically paired from the dollar can I pair the peso using the swiss franc.
All in all does currency trading work exactly the same as stocks and futures. . .are you basically just going short or long?
Thank you for the advice.
It seems perplexing. Can I basically have to predict both markets. If I'm buying the euro and selling the dollar, what if the dollar and euro both enjoy, can this occur??
Is everything basically paired off of the dollar can I pair the peso using the swiss franc.
Overall does currency trading work the same as stocks and futures. . .are you basically just going short or long?
Thanks for the advice. In currency trading, you trade pairs. So once you say you're long EUR/USD, you're saying that you believe EUR is going to love and USD is going to depreciate. It's not hard in any way. You are trading pairs and that's it. If you believe it's going up, you buy, and if you believe it's going down, you sell.
It still seems perplexing. Do I basically have to call both markets. If I'm buying the euro and selling the dollar, what if the dollar and euro both appreciate, can this occur??
Is everything basically paired from the dollar can I pair the peso with the swiss franc.
All in all does currency trading operate the same as shares and futures. . .are you basically just going long or short?
Thank you for the advice. Consider this way,
INTEL comes using a revoloutionary new Technology which AMD has no clue about. What would you do? Buy Sell AND INTEL AMD right. That would be two transactions. With Currency Pairs that will be one commerce. BUY INTEL/AMD . Why? Because you anticipate INTEL into GAIN BY COMPARISON TO AMD
Simple....
But What if SunMicro all of a sudden came out with something Even better. Now you have to consider INTEL/AMD, INTEL/SunMicro and AMD/SunMicro
You might prefer NOT to Trade INTEL/SunMicro as they should BOTH APPRECIATE but you would probably be okay Buying INTEL/AMD AND Selling AMD/SunMicro.
Currency Pairs are divided to two Main Categories.
Majors. in no Specific order
EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, NZD/USD, AUD/USD.
And
Crosses. Any combinations of the above. ie
EUR/JPY, GBP/JPY, NZD/AUD, AUD/CAD. etc. etc..
In addition, there are additional Minors Zloty, Zar, Krona but it is primarily around the br_ker if he wants to provide them for transaction. So, You may be able to find one which trades the CHF/Peso but I kinda doubt it.
The attached xl sheet might help you understand a little more.
https://forexintuitive.com/attachments/1518533922682473830.zip
I think what makes confusing is the character of'pairs'. The value is the rate contrary to each other. Not an across the board worth. Yes the euro and usd can concurrently become more powerful, or appreciate. Both the euro and the usd can whoop on the yen let us say. How would that affect the eur/usd pair? It could indie that it will become rangebound rather than move very much even as people person currencies are getting value against the yen. Each pair has it's own dynamics if a particular currency is undergoing a shift in value.
So I have to predict two markets rather than one. As an instance I think that the dollar will continue to sell I have to pair it with a different currency. Are there any currency pairs which move in opposite directions? For examle would the euro proceed in opposite direction of the dollar.
I more or less am interested in trading just like I did with stocks and commodities, buying and selling.
In currency trading, you trade pairs. So once you say you are long EUR/USD, you are stating that you believe EUR will appreciate and USD will depreciate. It is not hard at all. You are trading pairs and that is it. If you believe it's going up, you buy, and if you believe it's going down, then you sell. Just to clarify, in case your extended EUR/USD, your saing which you presume EUR will appreciate specifically against the USD, or, USD will specifically depreciate agains that the EUR.
You might end up imagining that the USD will depreciate, as an example, and buy exactly the EURO, but imagine should the EURO, also, is depreciating? (i.e., everyone is buying the Koran or the Yen, etc., etc?) Your bet will be right that the USD is depreciating, but the choice of the EURO to perform that bet could be the wrong pair to choose.
That sounds pretty tough. So I must be right with all the pairs I select. That kinda stinks, it makes it more difficult. You need to be correct on two trades on not just one.
I advise you to pick 1 pair and trade that till you get more experience. The fundamentals are distinct then trading a stock, however reading the charts shouldn't be something that you couldn't do with experience at the other markets. Adhere to the interest rates along with the (nonfarm payroll/Trade Balance numbers from The U.S). These releases cause the best movement right after they are released. Now 3/28/06 is a fantastic illuion of just what a .25 point raise in interest rates will do to the market. The hour right after it had been given was a fantastic moment to get in on the action. Both of these websites will give you the launch dates for the rest of the year for each. http://www.bea.gov/bea/newsrel/2006rd.htm
http://www.bls.gov/ces/ces_tabl.htm
That seems pretty rough. So I must be right with the pairs I select. That kinda sucks, it makes it more difficult. You need to be right on two transactions on not only one. Hello jones,
it's truly the same concept as trading stock/future. Just treat one pair as one stock/future and exchange with it!! You can treat Eur/Usd as trading INTC or Corn or whatever you can think off.
But Forex is different from inventory because of its leverage and continous trading interval. Consequently, you need to have a fantastic time and cash management for your trading egy....similar into stock/future. . .you should have trading egy for the stock/future, entry point, exit point. The difference isn't hugh besides some technical analysis does not work that well in forex.
I am currently using MA with William to trade Foreign Exchange with Metatrader expert advisor (which is fairly cool, I never experienced with automatic trading tools together with inventory before) and its own triumph:lose ratio is just 36 percent (but still earn $$$ since it is trend follower kind of entity ) and the difficult part is truly the money management rather than determine the right position.
It's a very exciting market in Foreign Exchange and also do not give up....give trials of demo for another 6-12 months and you'll definitely love it. Hope you enjoy it!
Johns,
Not to confuse you further, but one important point to remember with currencies are that there are very strong correlations (both positive and negative ) between some pairings. For instance, EUR/USD has a very strong NEG. Correlation to USD/CHF. Why that matters is it can be very easy to double your position one way or the other without realizing it. Or cancelling out some profit. As an instance, if you were EUR/USD and long USD/CHF you would essentialy be treading water because any gain in eur will be offset with a loss in swiss. (Not quite pip for pip as swiss includes a marginally smaller pip value) If you are long cable and euro in precisely the exact same time you've doubled you position since they proceed with a solid POS correlation. This is great when things are moving your way but can be disasterous when they aren't. Before you decide what pairings to trade get to know the correlations.
Johns,
Not to confuse you further, but one important point to remember with currencies are that there are quite strong correlations (both positive and negative ) between some pairings. For instance, EUR/USD has a very strong NEG. Correlation to USD/CHF. Why that matters is that it can be quite easy to double check your position one way or another without recognizing it. Or cancelling out any profit. For instance, if you were long EUR/USD and long USD/CHF you would essentialy be treading water as any profit in eur will be counter with a reduction in swiss. (Not very pip to get pip as swiss includes a marginally smaller pip value) If you are long cable and euro at the same time you have doubled you position because they move with a solid POS correlation. This is great if things are moving your way but can be disasterous if they aren't. Before you decide what pairings to trade get to know the correlations. The attached is a zipped XL sheet of MY Opinion of Mirrors Pairs that travel in Opposite Directions an Matches Pairs that travel at Precisely the Same Management .
It may seem a little confusing at first, but is Forex.
HTH.
https://forexintuitive.com/attachments/15185339231851427433.zip
Hi johns. . .you're fairly near...I have a similar background to you....
Whatever transaction you make, you are essentially trading with the first currency and the opposite with the second (they have names, but I forgot what they are). If you are buying one currency, you have to market another....for example, if you buy EUR/USD, you are bullish on the euro (as you are buying EUR and selling USD).
For example, lets say that you own a EUR/USD quote of 1.2036-39. You would buy at 1.2039 (ask) and market at 1.2036 (bid).
If you were to buy, you would be LONG EUR and SHORT USD. Lets say you buy 10,000 EUR worth. . .you'd be long a static amount of EUR and your USD currency would flucuate based on your own 10,000 EUR position.
Hope this made some sense!
If you have any other questions feel free to pm me...I was a n00b here not long past.
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