Trading Elements In the Forex Market

Trading Elements In the Forex Market, like any other financial market, operates with specific trading elements which you should master before starting your experience as an investor. Here is a list of these trading elements:

Price, Quotes and Indications - this refers to the value of a currency expressed in another currency. The first currency in a pair is called "direct quote", while the second is called "indirect quote". The value of the direct quote is expressed in the number of elements from the second currency which is needed in order to reach complete parity. The market offers indications related to this by the means of charts and exchange value lists.

Spreads - they refer to the difference in value which you can obtain by calculating the difference between the buying and the selling price of a certain currency pair. This is the element you should take into account when thinking about the period of time you are willing to trade a currency pair, as immediately selling after buying will make you loose money as the selling price is always lower than the buying one. This relates to the number of pips used, which is quite big when purchasing and small when selling.

Leveraged Financing - this refers to the pips, meaning the ratio level which you can use while trading. You can invest less money for a greater value provided that you set up an account of warrantee which is to set the limit of your ratio. This is the most important instrument traders use in order to score gains as it provides a better return rate based on a virtual loan, which, nonetheless, you have to guarantee for.

Margin - this is the instrument which helps you set the limit of losses. This is the minimum security level you can access and the value of the margins is actually responsible for the value of your account. It is margins that give you the opportunity of loaning in order to leverage and it is margins that prevent you from loosing more than you can invest, so this is an essential trading element.

Spot Transactions - as the name indicates, this function allows you to perform currency exchanges on the spot. The advantage of this type of trading is that you are not obliged to pay for the currency you have bought at the moment; you can have a delay of a day or two, based on your negotiation with the other trader.
Risks - this refers to the fact that the Forex trading market is a volatile market which entails numerous risks which traders have to be aware of. These risks are caused by a variety of factors, such as interest rates, the value of currencies, credit rates and the trading sentiment, manipulated by the events taking place on the market.
Of course, there are numerous other elements you should know about the trading market before starting to invest, but you should be aware of the fact that you should completely understand the Forex trading elements before risking your money.
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