When in currency trading, it is important to know the below information that is considered a must know by the experts if forex trading at cfd trading South Africa:
To understand better the position, the concept of a currency pair got introduced in the forex market. Instead of saying that you bought euro for the dollars or you sold euro for the dollars, the traders utilize expressions which are shorter. To purchase euro-dollar or to sell the euro-dollar is what is referred to a currency pairs.
Currency pair is normally recorded in an abbreviation as per the ISO 4217 standards of the various currencies in a succession with no space in between but in most cases, a slash is drawn to separate them. An example is the euro EUR and the USA dollar USD make a currency pair of EUR/USD or EURUSD – Eurodollar.
Buying of such a currency pair means to buy euros for the respective dollar rate. And all the time, whatever the currency is included in the pair, the currency which appears first in the pair is the one which is bought using the second. Thus, to buy AUDCAD denotes to buy Australian dollars using Canadian dollars. The same applies to selling EURUSD denoting, selling the euros for the dollars.
It is quite professional saying that the initial currency in the pair refers to the base while the second one is referred to as a quote. Thus, in the pair NZDUSD, the base currency is the NZ- New Zealand Dollar and the quote currency is the USD – USA dollar.
How to go about trading
The idea which is behind the trade is the same as opportunities for financial investment. The only difference which might be startling is that you have to buy one currency and sell the other simultaneously. The currency are quoted as pairs and the exchange rate shows the price for buying between the two currencies which are shown.
What is that moves currencies?
An amount which is increasing of the stock traders take interest in the currency market as most of the forces which move the stock market also are known to move the currency market. One of the largest is the demand and the supply. When the globe requires more dollars, the dollar value goes up and when there are a lot of circulating, the price drops.
There are other factors such interest rates, new data of the economy from the big countries and geopolitical tensions being among the many which might affect the price of the currency.
It is a concept which is must for newbies on forex trading. The leverage is the capital which is provided by a broker in increasing the trade volume that its customers can make
How it helps
The international forex markets are a place that is quite volatile to be in because the currency value tends to fluctuate very fast that it is highly impossible to keep pace manually.