The Basics Of Forex – What You Should Learn Before You Trade

The Basics Of Forex – What You Should Learn Before You Trade

The Basics Of Forex: What You Should Learn Before You Trade

Forex, a portmanteau of foreign currency and exchange, is the largest investment market in the world which plays a vital role in the global economy and has been evolving gradually throughout the years. It is defined as the buying and selling of one’s currency in exchange for another. If you intend to start trading forex Malaysia, you need to learn the ropes from square one, mainly on how to read the charts.

Here are the basics of forex trading in Malaysia you should know before you can kick start your trader skills:

There Are Many Types Of Charts

To read the rise and fall of your profit status, you are provided with many kinds of charts for your statistical data, but only three are commonly used among the traders. The line chart is the easiest to read as it only comprises one constant line that shows the opening and closing of the price in a period of time. However, you will learn too little information regarding your data – you are only informed about the increase and decrease of a price.

The bar chart is more detailed than the bar chart because it displays 4 types of prices, which are open, close, high and low price at a certain period – it provides more information regarding the data, but it can be too much to absorb at some point.

If you are one who needs the balance of the previous two, candlestick charts may be your best bet. This type of chart presents the open, close, high and low prices in an easier form by using body and shadow, shaping a candlestick for each data. cfd trading have enough data to take note of the price status, however be informed that you still need the understanding of reading the bar graph to make it work.

There Are Two Kinds Of Candlestick

If you opt for candlestick charts, you need to master the knowledge of bar graphs to simplify your workings on the types of candlesticks – bullish and bearish. Bullish candlestick shows the movement of a chart is at a low point only to spike up, whereas the bearish candlestick is the opposite; begins at the high point to dwindle to the lowest one.

Bullish market is also known as an uptrend whereas a bearish market bears the name of downtrend.

All Currency Trading Are Done In Pairs

Forex involves the exchange of one currency to another, therefore you have to buy one currency and sell another in the market. All currencies are priced out to the fourth decimal point. A pip, an acronym for ‘percentage in point’, is the smallest increment in trade with one pip equals 1%.

Normally, trading rookies trades currency in micro lots due to the fact that one pip represents a 10-cent move in the price, which makes losses handleable if a trade does not produce the desirable result.

In forex Malaysia, learning about forex trading may be easy in the eye, but to think about the right strategy to go for it takes a lot of practice to master.