Posted by forex at 7:48 AM
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1. Understand the symbols for the primary currencies traded. The primary currencies are referred to as the majors and they include euro (EUR), pound (GBP), U.S. dollar (USD), Japanese yen (JPY), Australian dollar (AUD) and the Swiss franc. Each currency has its own symbol. If you don't know the symbol for a certain currency, contact your local bank for assistance.
2. Review how currencies trade. Currencies trade in increments called pips. Pip stands for percentage in point. It is the smallest increment of trade in the forex market.
3. Identify currency pairs. Currency is usually expressed in terms of another currency. This other currency is referred to as the cross currency. For instance, EUR/USD is the euro/U.S. dollar cross. The rate tells you how many USD you can get for one EUR.
4. Review forex pricing conventions. In forex, the currency on top is the dominant currency. In the case of the EUR/USD cross, if the price goes from 1.2000 to 1.2010, the value of the euro is getting stronger and the dollar is getting weaker. If the price goes form 1.2000 to 1.1990, it means the value for the euro is getting weaker in comparison to the dollar.