When to buy a currency pair?

How do you know when to buy or sell a currency pair?

In the following examples, we intend to make a decision about buying or selling a particular currency using a bit of fundamental analysis (analysis of economic and political data).

These are just examples to illustrate the concept of buying and selling a currency pair. You do not need to fully understand the analysis in the examples.

Labels: Order to build a Forex robot , Build a stock trading robot , Build a trading robot , Trader robot design , Free Forex Robot , Forex robot programming , Forex Expert Making Tutorial , Build a trading robot with Python , Download Forex Trading Robot , Buy Forex Trader Robot , Automated Forex Robot , Free stock trading robot , Learn how to build a Forex trading robot , Alpari trading robot , Forex robot for Android , MetaTrader robot design , MetaTrader robot programming , Forex robot design , Forex robot programming , Automated trading

The supply and demand for a currency change according to various economic factors, which in turn cause the exchange rate to fluctuate.

Each currency belongs to a country (or region). Therefore, the focus of Forex fundamental analysis is on the general state of the country’s economy, such as production, employment, industry, international trade and interest rates. The better the economic situation, the more expensive the relevant currency.

wake up!

If you always fell asleep at the head of the economy class or rang the bell of the economy class, do not worry!

We will do a fundamental analysis in the future.

But for now, try to pretend you know what the situation is.

Processing of rice peat EUR / USD

In this example, the euro is the base currency and therefore the “basis” of buying / selling.

If you believe that the US economy will continue to weaken, which is a bad thing for the US dollar, you will order EUR / USD.

By doing so, you are buying the euro in the hope that the euro will appreciate against the US dollar.

If you believe that the US economy is strong and the euro is weakening against the US dollar, you are executing the EUR / USD sell order .

By doing so, you are selling the euro, hoping that the euro will fall against the US dollar.

USD / JPY currency pair trading

In this example, the US dollar is the base currency and therefore the “basis” of buying / selling.

If you think the Japanese government intends to weaken the yen to help its export industry, you will be looking to send a USD / JPY buy order.

By doing so, you expect the US dollar to rise against the Japanese yen by buying dollars.

If you think that Japanese investors are taking money out of the US financial markets and converting their dollars into yen, and this is not pleasant for the US dollar, you will execute the order to sell the USD / JPY currency pair.

By doing so, you expect the US dollar to depreciate against the Japanese yen by selling dollars.

Processing of dried rice GBP / USD

In this example, the pound is the base currency and therefore the “basis” of buying / selling.

If you think the UK economy will outperform the US in terms of economic growth, you will place a GBP / USD buy order.

In doing so, he bought the pound in the hope that it would rise against the US dollar.

If you think the growth rate of the British economy is slowing down. While the US economy is as strong as Arnold. You execute a GBP / USD sell order.

By doing so , you have sold the pound in the hope that it will depreciate against the US dollar.

Trading on USD / CHF

In this example, the US dollar is the base currency and therefore the “basis” of buying / selling.

If you think the Swiss franc is trading above its intrinsic value, you place an order for USD / CHF.

By doing so, you have bought the US dollar in the hope that it will appreciate against the Swiss franc .

If you believe that a weak US housing market is hurting future economic growth and weakening the dollar, you will place a USD / CHF sell order.

By doing so, you have sold the US dollar in the hope that it will depreciate against the Swiss franc.

Lot in Forex

When you go to a grocery store and you want to buy eggs, you can not just buy one egg. They both shoulders ( Lots ) 6, 12 and 24 are numerical.

In Forex, it does not make sense to buy or sell only $ 1. Therefore, buying / selling currency is usually done in the form of combs or packages of 1000 units ( micro lot ), 10,000 units ( mini lot ) or 100,000 units ( standard lot ), depending on the broker and the type of account you have (more Lessons will be discussed in the lesson) will be variable.

For now, know that a standard lot of 100,000 is the base currency of the currency pair you are trading.

Margin Trading

“But I do not have enough money to buy 10,000 euros! Can I still trade? ”

Yes you can! Using a phenomenon called leverage!

You do not need to pay 10,000 Euros in advance when dealing with Leverage. Instead, you deposit a small “deposit”, called a margin .

The ratio of the size of the transaction to the cash (“trading deposit”) used for the margin is called leverage .

For example, a 50: 1 leverage, also known as the 2% required margin, means that a $ 2,000 margin is needed to open a $ 100,000 trade.

Margin trading allows you to open large trades using only the capital deduction normally required.

This way you can open a $ 1,250 position for only $ 25 or $ 50,000 for $ 1,000.

In fact, you can do a lot of trading with a small amount of initial capital.

Let us explain further.

We’ll discuss the margin in more detail later, but hopefully you can get the main idea of how it works.

Listen carefully to the following because they are so important!

You believe that the signals in the market indicate the rise of the British pound against the US dollar.
You open a standard lot (100,000 units) on GBP / USD and buy the British pound with the required 2% margin.
You are waiting for the exchange rate to rise.
When you buy a lot of GBP / USD for 100,000, you are actually buying ۰۰ 100,000 worth $ 150,000. (100,000 pounds × 1.5 million)
Because the required margin was 2%, $ 3,000 will be deducted from your account to open the deal. ($ 150,000 × 2 ٪)
You now have control of ۱ 100,000 for just $ 3,000.
Now you decide to take a 20-minute nap (if stress allows).
Your predictions come true and you decide to sell. You close the trade at 1.50500.
You made about $ 500.

When you close the deal, the deposit (“margin”) you paid in the first place will be returned to you and your profit or loss will be calculated.

This profit or loss is then credited to your account.

Let’s look at an example of a high GBP / USD trade.

GBP / USD only increased by half a penny! Not a penny! Half a penny!
But you made $ 500!
Even while you were lying down for a long time! 🙂
How about Because you were not just trading ۱ 1.
If your trade was ۱ 1, yes, your profit would be half a penny.
But… When you opened the deal, the size of your deal was ۰۰ 100,000 (or $ 150,000).
Interestingly, there was no need for you to put all this money in the middle.
It only took $ 3,000 to open the deal.
$ 500 profit from $ 3,000 initial capital is equivalent to 16.67% return!
In twenty minutes!
This is the power of leverage trading!

A deposit with a low margin can lead to high losses as well as high profits. In fact, the leverage is a double-edged sword .

It also means that a relatively small move can similarly lead to a large loss or gain .

In fact, you could easily lose $ 500 in just 20 minutes.

In this case, you would not wake up from a nightmare. But when you wake up you get into a nightmare!

The above leverage looks cool, but can be deadly .

For example, you open a Forex trading account with a small deposit of $ 1,000. Your broker offers 100: 1 leverage to open the $ 100,000 EUR / USD position.

With just 100 pips, your account will reach $ 0! 100 pips oscillation easily occurs during the day. As a result, you could easily lose $ 1,000 a day.

When trading with a margin, it is important to know that your risk is based on the full value of the size of your trade. If you do not understand how the margin works, you may quickly lose your account. We want to stop this. Given this risk, we have dedicated a complete section called Margin Trading to explaining the performance of margin trading.

Night interest or swap

For trades that are open at 00:00, there is a “transaction transfer fee “, also known as a ” swap “, which a trader must either pay or receive depending on the in-game trades he has.

If you do not want to take advantage of or trade on your trades, just make sure they are all closed before 00:00 on your broker trading platform.

Because every Forex transaction involves borrowing one currency to buy another currency, the costs of transferring the transaction to another day are part of Forex trading.

These costs depend directly on the foreign exchange bank interest you buy and sell.

You will receive a bank interest on the currency you buy.

The bank interest on the currency you sell is received from you.

If you are buying a currency with an interest rate higher than the currency you are selling, then the net difference in the interest rate will be positive and you will receive a profit as a result.

Conversely, if the interest rate difference is negative, then you have to pay it.

Note that many forex brokers adjust their swap rates based on a variety of factors. (E.g., account leverage, interbank loan rate).

It is best to visit the broker’s website to see the exact amount of swaps that will be awarded to your trades.

Interest rates of countries

In determining the rate of swap, the interest rate of each country is the main criterion. In Inlinek from Wikipedia, you can see the interest rates of countries.

One of the strategies proposed in Forex is based on the use of these swaps. Later, we will teach you everything about how you can use it to your advantage.