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Beginners

People who decided to try trading on Forex need to know how to begin. Forex offers for the beginners the basic knowledge and understanding of the concepts, such as the transaction types, currency rates, principles of margin trading, and how to calculate profit and loss on Forex trading.

 

Traders
The traders are divided into two groups in Forex market: active and passive.

The first group includes the central banks of countries, commercial banks, and the brokerage firms that are brokers, and they are the main link between the other traders. Active traders of the Forex market make the currency transactions, as well as they offer and set the quotes on various types of currency.

The second group includes the investment funds, dealing centers, participants of foreign trade, and the private investors. They can trade various currencies, but they cannot set the quotations. The private investors use the principle of margin trading and trade just as the other participants in Forex market. Everybody may really start from scratch in this market!

How are currencies coded in Forex?
Forex trading for the beginners assumes the knowledge of basic codes traded currencies. As there are a lot of different currencies, they are coded in Latin. The first two letters stand for the country, and the last letter stands for its currency. So, USD means U.S. dollars, and JPY - Japanese yen. As the quotations and trading currencies are done in pairs, the codes look like EUR / USD or EURUSD, where the first currency is the base, the second one is quoted.

The principle of margin trading
Before a beginner starts trading on Forex this trading investor should understand the principle of margin trading. Due to this principle is possible trading of the private investors in Forex market. In order to start trading in Forex market, the beginners do not need to have a large amount of funds. By investing relatively little money, you can control and manage the capital that exceeds your own in the tens and even hundreds of times.

Getting started in Forex, first you need to choose a broker. Out there are many dealing companies in the market, which make themselves currency transactions in the foreign exchange market and make it possible to do it for the private investors. The dealing company opens for you a security deposit account on which transfers a certain amount of money. Under this deposit the broker gives you a credit line that exceeds your own deposit in tens or hundreds of times. This credit is called leverage. The leverage can be 1:20, 1:50, 1:100, and more. That is the amount of money provided for you to do trading. The dealing company has no risk, because your losses are limited only to the deposit that you invested at Forex. It is important for the beginners to understand that by using leverage, you can perform quite big transactions in Forex market. What is the size of the security deposit? This is a rather difficult question. The answer depends on what strategy you are going to use during trading, and if you have any experience in Forex trading.

Generally, for the beginners to start trading on Forex market, the dealing companies offer to open standard, mini and micro accounts. The last accounts are good, as they give a real idea of how to start making money on Forex, investing the minimal funds. To work with the standard accounts, the minimum recommended amount of deposit should be 1500-2000 USD.

The information sources for trading on Forex
Another important aspect for the beginners when working in the Forex market is to get a correct analysis of the information that is necessary to select the trading strategy. The sources of such information may serve as a summary of economic news, forecasts and analysis of the current situation on the currency market. The principles of forecasting and analysis in Forex market will be discussed in the next chapters.

In addition, the trader may take part in some discussions on the specialized internet forums for Forex traders, in order to master the skills. The forum for beginners is a place, where they can discuss financial topics with more experienced traders.

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