Though Forex trading is referred to as the exchange of foreign currencies. Forex trading in India may look complicated, however, the truth is not that. It can be quite tough for beginners. This happens usually because of unrealistic expectations that are very common among forex beginners. You should know that trading is not a get-millionaire-quick scheme.

In this blog, you will come to know about the basics of trading, key terminology and how it works.

Step 1- Understand the key terminology

There are various considerable elements that need to be known while you may be dealing with forex. Before you dive into the regular updates of your investments, it may be important to recognize several basics of forex. These include some commonly used terms and concepts that need to be understood.

A firm knowledge of the most frequently used forex terms can make your easy entry into the forex market. Some forex phrases and terms that you’ll come across again and again like:

Base Currency:

Base Currency refers to a currency you are holding. For example, if you’re from India, then your base currency would be INR.

Quote Currency:

It is referred to as a currency which you are agreeing to buy.

Bid price:

Bid price refers to the price that your forex Broker would be wishing to “buy” or “bid” your country’s currency.

Ask price:

Ask price is a price that your forex broker will “ask” from you in exchange for purchasing your quote currency. Also, know one thing, the asking price is relatively higher as compared to the bid price.

Spread:

The spread is the difference between the BUY price and the SELL price of two instruments. For example, if the EUR/USD is trading at 1.3100 (buy) and 1.3098 (sell), then the spread is 2 pips.

Pip:

In financial markets, specifically in the Forex market, pip (percentage in point) is a unit of change in the exchange rate of a currency pair. Most major currency pairs are priced to four decimal places, and a pip is one unit of the fourth decimal point: for dollar currencies, this is to 1/100th of a cent.

CFD pips:

You have been long involved in trading shares, you might be confused about the use of pips in stock trading. When trading shares are considered, there is probably no use of pip. As there are already terms that present the various regulations regarding price changes. The concept of pip could be rather confusing for any new forex trader.

You may now be clear with the concept that pip is the last decimal place of any price quote. If USD/EUR changes from 1.1050 to 1.1051, the change in value would be recognized as one pip. Once you’re clear with the concept of pip, you would also require understanding Pipette or fractional pip.

Well, fractional pip is the “tenth part of a pip”. For instance, if the USD/GBP moves from 1.30542 to 1.30543, the .00001 change is regarded as a fractional pipette.

While this is just a shallow detailing, understanding the basics of Forex could be rather complicated.

Once you get familiar with these forex terms, you will get ready to enter the world of the forex market.

Which Forex Currency Pairs Can You Trade?

Well, Forex pairs are divided as minors, majors and exotics. In this major pairs is consist of most commonly traded currencies like:

• EUR – The Euro
• JPY – The Japanese Yen
• AUD – The Australian Dollar
• NZD – The New Zealand Dollar
• USD – The US Dollar
• GBP – The British Pound
• CAD – The Canadian Dollar

Minors forex currencies are built of currencies that doest contain the US dollar. Such as; EURGBP, AUDNZD, EURCHF.

Lastly, exotic pairs are currencies are HKD, ZAR, NOK, and THB. it is made up of one major currency and one exotic currency.

Step 2: Choose a Reliable broker

Before starting with Forex trading in India you are supposed to choose a reliable broker. Your forex broker will assist you to make appropriate trades, and various online brokers also provide additional financial services.

If you are a newcomer in the forex market, be sure to contact a reputable forex broker to make your first forex experience happy and worthy. Working with a reputed forex broker can make a huge difference between losing money and profiting from your forex trade.

Before hiring any broker, make sure to read the reviews of several brokerage companies. Doing this will help you choose a reliable broker for successful trading experience.

Step 3- Examine the world Economy

Making money in forex trading is just about the right prediction of the flow of the world economy.

If you want to be a successful trader, turn your base currency to quote currency to increase the value, then transform the quotes currency again to your base currency at the time when the value of it rises.

For the right prediction, make proper research about GDPs, trading positions and political climate of countries you are involved in buying currency from, this will give you a good lead and will also give an idea on which quote currency is best to invest.

Step 4- Let’s begin with your first trade:

Once you have finalized the quote currency you want to invest in or buy, its high time to make your first trade. Your online broker must offer you a trading software that lets you fix an order to sell or purchase a currency.

Use your trading platform to place your first trade order. Different trading platforms have different specifics. You can also watch online tutorials to easily place your trade order.

Once you are done with placing your first order, now just sit relax and leave everything on your broker.

Hope this step-by-step guide is enough for the idea of how to start with trading.

This guide is for Indian forex traders for successful trading experience. You can start trading with a demo account, once you think that you are skilled enough, change your demo account into a live account.

The post Step-by-Step Guide for Forex trading in India appeared first on Forex4money Blog.