Communication is the core of trading between ones value for another. In Forex understanding order types is vital! Forex platforms were designed as the vehicle that allows traders, investors, and companies interact in the world of currency exchange. Familiarizing with basic definitions and relations to the currency pairs are notably essential before we approach to take a trading position. Using a demo account is the best form of practice in which you can relate and recognize the logics of the market. All brokers nowadays use the same markets terms, like any other market good communication is decoded and encoded properly to eliminate errors. This is true unless you start dealing with more advanced forms of trading, which will be discussed in a later tutorials.

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An introduction to Forex trading requires understanding the complexity of the various factors that make the market work on a daily basis. The system of swapping currencies, one for another, for the sole purpose of raising our worth value has revolutionized the form we do our trading and our investing nowadays. In today’s market, technology has enabled us to make daily transactions automatically, without being delayed by any reason. In Forex, over the counter trading, is only a downloadable computer platform and an internet connection away that enables us to make transactions and investments. Having the right Forex broker is a very important part of your trading.
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Currency pairs and leverage

In order to define a currency to trade, the international standard ISO 4217 established a system to help identify currencies by assigning a three letter code to each currency. Normally, the first two letters are the alpha code of a respective nation, like the U.S., and the third letter usually represents the actual name of the currency, like the dollar, for example U.S. + D = USD. Chart of most popular currencies

 In Forex trading, currencies are traded against one from another in form of pairs, the quotations of the pricing structure is determined by the comparison of the first currency called the “base” and the second normally refer as the “quote” for example EUR/USD priced at 1.4456 The price of the Euro is expressed in U.S. Dollars = 1EUR/1.4456USD In order to increase a potential return on an investment in this case in Forex trading, leverage is a financial tool that increases the trader’s ability to profit from a single trade. Because the daily fluctuation of currencies is generally very small in percentage, the use of leverage increases the value of a trade by borrowing capital from a broker, therefore increasing the trader’s ability to increase profits from a trade. Depending on the size of the account, many brokers offer up to 200 to 1 leverage, meaning that for every dollar worth of a currency a trader is willing to risk from his or her own capital (also called margin), leverage would allow to trade up to 200 worth of that same currency. Usually the amount of leverage provided by brokers is 50:1, 100:1 or 200:1. So if a trader uses $1,000 to open his margin account, using a 100:1 leverage, he or she can trade $100,000 in the Forex market. Although leverage has the ability to earn a substantial profit, it can also work against the trader by amplifying the losses.
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