Important Information about Forex you Should Know

Important information about Forex you should know

Leveraged trading

The ability to carry larger trading positions than someone owns capital is feasible through the leverage feature provided by the brokerage.

At AvaTrade, traders can enjoy up to 20: 1 leverage on most of their currency pairs.

This means that the trader needs only 0.25% of the trade size so as to open a footing.

For example, if the euro currency pair against the US dollar is quoted at a damage of 1.1123.

To open a footing of 100,000 units of the financial instrument, the trader needs 100,000 euros or 111,230 dollars.

However, due to the leverage, the trader needs only 0.25% of the deal’s value, that is, 278.07 US dollars or 250 euros.

The ability to realize leverage for a footing may be a great advantage that may increase the trader’s profits.

However, it must be borne in mind that the losses also can be significant.

How does one calculate the price of a forex trade?

When a trader opens a foothold through AvaTrade, he doesn’t change the other commissions besides the spread.

This difference is that the difference between the buy and sell price which is calculated in pips – the fourth number after the pip.

For example, if you get the euro against the US dollar at 1.1123 and sell it at 1.1120, the difference in price is 3 pips.

The difference within the price restricted on a grip opened by a trader is that the price difference multiplied by the dimensions of the deal. AvaTrade clients can choose from trading forex with a set price difference versus trading with a floating, flexible and changeable price difference, where the spreads are displayed ranging from a minimum of 0.8 pips.

How does one calculate points in Forex trading?

Price movement is measured in Forex trading in points, where currency exchange rates publish some very small differences, and therefore the point is that the last decimal place for the costs of the currency pair, where the worth contains four decimal points, and a few rise to five decimal points.

When you trade a regular contract like (100,000 units of currency), the pip value is fixed at $ 10 within the event that the US dollar is that the quote currency, like the EURUSD pair, when the US dollar is that the base currency, like the USD CAD pair, the purpose is calculated at $ 10 of the rate. Current, example of this if the value is 1.2000 then the pip value are going to be $ 8.3 ($ 10 / 1.2). When it involves the japanese Yen (JPY) the rule is to multiply the result by 100.

Range of markets

AvaTrade provides traders with the power to trade over 50 currency pairs, also as all major, minor and non-tradable currency pairs.

For more information on leverage and spreads for all currency pairs offered by AvaTrade, please take a look at the trading conditions and charges.

What are the factors that affect the Forex market?

The exchange rates within the market rely on several factors, including the speed of supply and demand, political and economic stability and monetary policy of states, because the decisions of central banks and monetary policies taken by some countries are the most engine within the market, additionally to economic data issued by central banks and financial institutions Global, which relates to unemployment rates, total consumption, spending, etc.

Investors expect what may happen within the market before this data. within the event that their expectations exceed the issued data, the worth of the asset will decrease, and when their expectations regarding the info and reports decrease, the value of the asset will rise.

As for other factors that will affect the exchange rate within the market, they’re the news reports of every country, the positive of which plays a task in increasing the demand for the currency of this country and thus the currency rises and the other way around.

Market sentiment is one amongst the foremost prominent factors that will affect the movement and activity of the market. When investors expect that the currency will head to the downside, they’re going to trade with a decline, which reduces the demand for the currency and thus its price decreases.

Among the opposite important factors is that the credit rating of every country’s currency, which is an independent assessment of the likelihood of repaying the country’s debts.

How to adopt a sturdy Forex trading strategy?

We cannot underestimate the importance of strategic strength in forex trading, so this plan must be adhered to under any pressure, as saying is simpler than doing, and to create a powerful strategy for trading within the forex market, you need to follow the following:

You must determine whether you may exchange the short term or the long run, as this timetable indicates if you’re exploiting, your focus could also be on short term charts like the minute and five minutes chart up to the 30 minute chart, but if you’re gazing the long-term charts which can be up to each day or every week.
Trade methodology
You must decide whether you’ll be able to trade technically or fundamentally, as technical analysis consists of predicting the direction of the value within the future, supported past price movements, while basic analysis is an analysis supported how economic, political and social factors affect the costs of economic assets.
Trading rules
Point of trading rules is that the backbone of your trading strategy, and this includes trading hours, trade ins and outs, stop loss levels, take profit and indicators similarly as a way to pander to economic news.

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