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Currency trading takes place in the foreign exchange market. Currency is vital because it allows people to buy goods and services both locally and across borders.
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Factors to
consider before
you start
trading
1
Currency trading takes place in the foreign exchange market. Currency is vital because it allows people to buy goods and services both locally and across borders.
2
To conduct international trade and business, international currencies must be exchanged. It can be described as a network of buyers and sellers who exchange currencies at a pre-determined price. Individuals, businesses, and banks use it to convert one currency into another.The market has existed for centuries, but it is only recently that it has become popular.
3
Because it is open 24 hours a day, five days a week, it has evolved into a terrific venue to trade on the global market.
4
By buying the currency with the higher interest rate and shorting the currency with the lower interest rate, you can benefit from the difference between two interest rates in two distinct economies as an investor.
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Discovering how to set up a stock screener for trading that aligns with your strategy is key to success. With TradingView you can learn all about that and many other topics like the US Dollar Index, or DXY, a key metric for forex traders. Learn what the dollar index is and its significance. You can also investigate why the economic calendar is an essential risk management tool for traders. Learn more on TradingView.
Frequently asked
questions
Long position
A position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long. This position is taken with the expectation that the market will rise.
Bid price?
The price at which the market is prepared to buy a product. Prices are quoted two-way as Bid/Ask. In FX trading, the Bid represents the price at which a trader can sell the base currency, shown to the left in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the Bid price is 1.4527, meaning you can sell one US Dollar for 1.4527 Swiss francs. In CFD trading, the Bid also represents the price at which a trader can sell the product. For example, in the quote for UK OIL 111.13/111.16, the Bid price is £111.13 for one unit of the underlying market.*
Buy
Taking a long position on a product.
CFDs
A Contract for Difference (or CFD) is a type of derivative that gives exposure to the change in value of an underlying asset (such as an index or equity). It allows traders to leverage their capital (by trading notional amounts far higher than the money in their account) and provides all the benefits of trading securities, without actually owning the product. In practical terms, if you buy a CFD at $10 then sell it at $11, you will receive the $1 difference. Conversely, if you went short on the trade and sold at $10 before buying back at $11, you would pay the $1 difference.
Closing price
The price at which a product was traded to close a position. It can also refer to the price of the last transaction in a day trading session.