Very easy to understand information is readily available in the section where you will learn how to trade. Information such as fundamentals of how trading works, technical analysis and understanding charts, very simple explanations understandable to new clients and newbies in the trading business and other key components to keep you more knowledgeable for your needs to get started are available.
What is Forex section will give you insight into the global FX market, the advantages, risks and which currencies are traded. Here you will also find details on How Forex Works along with terms to help you become knowledgeable in the trading terminology.
The Fundamental and Technical Analysis sections deals with the concepts of trading using different news elements and an introduction to the different chart types and understanding of trends. We move forward to the section on knowing what a Technical Indicator is where we discuss and explain the four main types of technical indicators used by traders.
Forex is the simultaneous buying of a currency and selling of another currency.
A currency pair makes up these 2 kinds of currencies. Each currency is represented in three letters (e.g. JPY for Japanese yen). To understand the three letters code the first 2 letters represents the Country and the last letter represents the Currency name.
Forex pairs can be read in the opposite direction of ratios or mathematical proportions. Base currency are placed on the left before the / sign, while the quote currency is how we call the currency on the right or next to the / sign.
Example of this is USD/JPY = .1100
This can be read as 1 unit of USD is equal to JPY 110. One has to pay JPY in order to get USD 1.00
For selling, the foreign currency exchange rate specifies how much units of the quote currency you get for selling one unit of the base currency. The above example dictates that one will receive USD 1.00 when he sells JPY 110.
A trader has to understand the basics of the terminology used in order to understand more about forex market, which includes the knowledge to interpret forex quotes and calculations.
ECN STP Broker
GQ FX is an STP (Straight Through Processing) electronic communications network (ECN) known to be as an ECN STP brokerage. Its task is to provide clients with direct access to other participants in the currency market by having a process of consolidation of price quotations from several banks specially involved with the trading business. GQFX gets to have instant access through STP to the best prices with very tight spreads.
Pips and Pipettes
GQFX has currency pairs quoted by 2, 3 and 5 decimal places and are known as pips and pipettes.
- On a 5 decimal place currency pair a pip is 0.00010
- On a 3 decimal place currency pair a pip is 0.010
- On a 2 decimal place currency pair a pip is 0.10
For example: If GBP/USD moves from 1.51542 to 1.51552, that .00010 USD move higher is one pip.
Spread is the difference between the bidding and the asking price in the market of quotes. The Asking price is the one is applicable to a buying order and the bidding price is applicable to a selling order.
The operation of the GQFX uses variable spreads. These spreads don’t have the same constant value. A variable spread condenses and widen as the market conditions and liquidity changes.
The ability to control large amount of money in the foreign exchange trading is called leverage. It can increase profits as well as losses so it is an important that traders gets sensitive when leverage is being used. Leverage also gives traders the ability to make profits that are sensible on daily movements of currencies and at the same time provides minimal risk on a given position.
The amount of money that is required to order an account is called Margin. It is calculated based on the current base currency market quotes of the Traders account versus the base currency of the traders account, its volume that is requested and the leverage of the trader’s account. Margin is available in the MT4 trading terminal.
The warning message that occurs when a trading account is running out of funds to sustain their current positions in the market is called a Margin call.
Through the Margin Call additional funds are requested if and when the market moves against the trader’s position. The eventuality of closing out of the trader’s position is vulnerable once there is an insufficient available fund.
Hedging is the opening of new positions in the opposite direction of an existing position on the same instrument. To hedge a position no additional margin is needed. Again it is important to note that a new position can not be opened with insufficient usable margin at hand.
Swaps and Rollovers
Interest income and capital gains can be generated through Forex. There are two different interests rates in every trade that involves two currencies which we call pairs. A rollover or a positive roll is a product of interest rates of the currency a trader bought that is higher than the interest rate of the currency that the trader sold. The opposite of this is called the negative roll meaning to say the interest rate on the currency the trader bought is lower than the interest of the currency sold. These rollovers or swaps can add up extra cost or profits significantly to a trade.
Expert Advisor (EA)
Expert Advisor are programs that follows set of rules in the calculations to develop open trades in behalf of investors in the MT4 platform. Signals are generated by various technical indicators that may be acquired online for EA.
Virtual Private Server (VPS)
MT4 platform still run even if the trader exits the program because of the Virtual Private Server. At times downtime due to technology and connectivity failures happens and this system provides minimal chance for downtime to affect the traders transactions.
MT4 platforms used in MAM or Multi Account Manager are designed for Money Managers who trades in behalf of other investors. It also manages multiple accounts from a single interface. Expert Advisors or EA can also be utilized by Money Managers to manage Multiple Accounts.
One Click Trading
Allow opening of trading in one single click in the platform interface.
Safe Haven Currencies
The term to describe trading an alternative currency that is less unpredictable as a result of market uncertainty is called Safe Haven Currencies. It is also labeled as an instrument and are considered low risk because the issuing governments are not only stable but economically strong. However this does not guarantee that it is safe.
It is basically the study of the overall economic, political and financial and several factor representing and quantifying the economy in question which can influence a financial instrument.
Technical analysis is the study of prices over time. Comparing current price action with historical price action to identify patterns that can suggest most likely to happen future price movements is how Technical analysis happens.
Trend is described as the current direction of an investor’s outlook towards the direction of a financial instrument. These are lines that can be drawn on a chart between two or more turning points. It is normally used to judge an entry and or exit points when doing trading.
Technical Indicators are results of mathematical calculations that were designed by professional traders. The indicators are based on indications of price and/or volume of transactions.
Gold is the most popular of all metals falling from the Precious Metals reason why its popularly traded. Most investors buy gold as a hedge during economic, political and social uncertainty. Gold market is subject to speculations. The history of Gold and its role of gold reserves in the majority of the central banking and its low correlation with other commodity prices and its pricing suggest that gold behaves more like a currency more than a commodity.
Gold’s behavior in terms of value fluctuates the reasons are the following:
- Inflation on a Global scale
- Threats to oil supplies coming from oil rich countries
- Unpredictable changes in the forex market.
There are several Order types in the trading exercises that need to be given attention:
Market Order is an order to open a buy or sell position at the best and reasonable current available price.
Pending Order is an order in buying and selling of instruments at a specified price. It only will take effect when the market reaches a specific price that is of interest to the trader.
When the market moves past a clients specified entry level a Limit Order is triggered. It provides the limit order price or a better price on your trade entry but it will never be a worst price.
A conditional order set a fixed price level that is targeted at closing a position after a certain price has been reached is called a Stop Loss. It is triggered when the market moves in an unaccepted unfavorable direction for a trader. When a position is losing money stop loss prevents it.
Is a kind of Stop Loss Order that moves with the trader as the market price is unstable or is rising and falling. It is not a fixed price and is set in a distance of pips. The Trailing stop activates when the trailing stop level has been achieved. Trailing Stop is designed to realize the profits made by the trading positions.