Saturday, November 15, 2008

Learn Forex - Beginner Forex Lesson

Forex Trading Beginner's Lesson

Doing research on the Forex market? Perhaps you are even looking for a good Forex course? There are many to choose from. Keep reading for a free basic Forex lesson and then stop by our blog to read the top reviews on all the popular Online Forex programs.

There are two different prices in a Forex market. The bid price and the ask price. In Forex, the prices do not favor you but the broker. This is the way the broker makes his money so the prices are in his favor. The ask price is always higher than the bid price. Unlike the stock market, when you are trading In Forex trading, you generally buy high and sell low to take advantage of trending markets.

If you choose to purchase currency pair in the Forex market, you have to pay the ask price. If, using the example of the GBP/USD you believe the pound is going to strengthen against the dollar, you would then be purchasing the pound at a lower rate and selling the dollar, which is going to weaken. The pound will be the base currency and will control the trade. In Forex, this is called a long position.

The bid price is the price you sell at. Using the GBP/USD example, if you predict that the dollar will come back and eventually become stronger than the pound, you would take a short position and sell the pound and buy the dollar. The base currency will still control the direction of the trade.

Whenever you are buying the cross currency, or the one which is not controlling the trade, the USD in the GBP/USD pair, all signals will reverse. The price of the currency pair will go down, which you would then wanet to sell to make a profit.

You have to decide the number of pips you earn in a short trade as the same as those you would earn in a long trade. Ignore the purchase or sale price and figure the difference between the higher number and the lower one to get your gain.

In Forex, the spread is the difference between the bid price and ask price. This is the amount the Forex broker will take as his commission. The broker makes money on the large volume of trades and not by charging large commissions.

In Forex, spreads can be quite competitively priced. When the spread is small, the trader will have more profit. Keeping the spread smaller helps the brokers to attract more traders. Spreads are usually minor among the widely traded currency pairs, also referred to as the majors.

In Forex, a lot of money can be made...and can be lost. Trading on the Forex market is a learning skill set you should not take lightly. There are many Online Forex programs that can really help you learn.

However, many of these Online Forex programs are over-priced and NOT worth your time or money. Be sure to visit for the best Online Forex programs Reviews that we gathered from consumers. Not all Forec courses are the same - be sure to get the best one as rated by consumers.

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