When trading currencies, the trade is always (Forex) executed

When trading currencies, the trade is always executed as a currency pair. One currency is bought and the other sold relative to the supply and demand of both currencies. For example, you buy Euros with U.S. Dollars anticipating an increase in the value of the Euro relative to the U.S. Dollar. If the Euro rises against the U.S. Dollar, you can close the trade having made a profit. Yet, suppose the Euro falls relative to the U.S. Dollar, you may experience a loss. Self-traders should consider focusing their attention and become very familiar with one or two of the major currency pairs (EUR/USD, GBP/USD, USD/JPY, and USD/CHF).

A Forex trade is comprised of the following basics:

1. Currency Pair
2. Number of Lots traded
3. Trade direction Long (buying) or Short (selling)
4. Order type Market or Entry order
5. Money Management Stop Loss order and Limit (Take Profit) order

In my next post, I will go through some suggested rules for profitable Forex Trading.

Forex Currency Trading
Mini Forex Trading