How Does Money Trader Work? Explanation on Currency Trading and the System
Recently, the world of trading has become very popular and many people, want to make a lot of money online easily. However, they do not think carefully before investing this kind of investment. The result of trade’s hasty actions was that they would fail and lose an unimaginable amount of money like never before.
Incidents that have been widely circulated on this news site can be overcome with the right understanding and education about the world of trading. So it is very important to prepare capital knowledge and important tips before you prepare capital in the form of money or the like. The money market or Forex is the biggest investment market for now and is growing.
How Currency Trading Works
The trading market is always open 24 hours except on Friday and Saturday evenings. You should also know that the applicable time zones are the Americas, Europe, and also Asia, so there is a possibility that the hours of purchase will overlap. Then you need to know well which hourly currency pair will have the highest volume and can be profitable for you. For example, if you have a lot of stocks with dollars, then the high volume is in the USA.
The currency trading works in pairs. Different from the stock market which you can get or throw one stock, in currency trading, you must buy one currency and then sell the other currency inside the Forex. The next step is almost every currency is tagged with the fourth decimal number.
A pip/percentage in the point is considered the smallest increment in trade. A pip is typically the same as 1/100 by 1%. An exception to this rule happens in currency pairs including the Japanese Yen or JPY for the quote currency. The pairs are typically tagged out in two or three decimal places, and the pip is represented in the second decimal place.
Currency trading is going with various size lots with micro-lot containing 1,000 units of one currency. When your account is liquid in US dollars, then the micro lot represents USD 1,000 from the base currency that is the dollar. The mini lot same as 10,000 units from the base currency, then the standard lot is around 100,000 units.
Retail traders generally trade the currency with micro lots; it is because a pip inside the micro lot will represent only a 10-cent move according to the price. This will make losses able to be managed when the trade does not produce as expected results.
One pip in the mini lot is equal to USD 1 and the same pip in the standard lot is equal to USD 10. Many currencies can move as much as 100 pips or even more in one trading session which makes the losses to the mediocre investor much easier to manage when trading in the micro or mini lots.
Shake the Currencies
The increasing number of stock traders blows the interest in the currency markets. It is because the forces that shake the stock market also shake the currency market. The largest shake is by supply and demand. It means that when the world or money trader requires more dollars, then the value increases, otherwise, when it is too many than the price circulation drops. Make sure you have understand what is stock market and investments so you know which one to invest.
