How to trade in the currency markets : ABC of trading

Currency market is called forex market, in short fx Market.  But how it is structured.  Currencies are traded in pairs.  Historically Most popular pairs are called Major pairs they are,

1. eurusd, 2. gbpusd 3. audusd. 4 usdchf  5. usdjpy 6.usdcad
above are the most traded pairs in the world.  There are also other cross pairs they are naturally called fx cross pairs.  mainly eurjpy, eurgbp etc. are pupular, there are hundreds.

If you notice, all above pairs got on currency common that is USD, the Single largest Currency in the world!!

Second largest is the euro currency hence most traded is the eurusd pair, currencies are traded in pairs as it provides simple buy sell for each currency.

When you buy eurusd you are buying euro and selling usd.  When you are selling eurusd you are selling euro and buying usd...It's quite efficiant hence they are traded in a combination of two currencies.  There is also less traded pairs such as nzdusd(some consider this also major But i don't), usdhkd( hongkong dollar), usdthb(thai bhat), usdsgd, usdzar, usdtry, usdmxn, usdnok etc.  These are basically traded almost always against US Dollar(usd) so they are paired usdx, where  x = hkd, thb, try(turkey) etc...

For Bangladesh currency mostly traded against usd so it's also paired as usdbdt(thinly traded pair, so not available on most brokers).

So to trade you open one account with your money to a reputable & licensed broker.  They provide account with major currencies such as USD, EUR, AUD etc...and You deposit money into your account and trade all the available currencies.  All broker that are retail, as we are small time traders that are called retail traders i.e. The Genaral Public.  There are also Institutional traders such as traders working for Major Banks or Minor Banks.  There are also other Investment firms that employ traders such as US(Experienced retail traders) and let them trade for them/institutions.  Generally institutions got Huge accounts without leverage!!, i.e minimum 100k Max. upto few Million real USD or EUR.  Sometimes these Institutions are also called Prop. trading firms, employing Experienced traders to trade their funds.

As this trading is almost always traded over the internet i.e. traded online they can employ traders from all over the world!!

One thing is common among Institutional traders, they do not use stoploss!!, as currencies sway in one direction and return later to it's equilibrium they can actually get out later a loosing trade in breakeven!!, this is not the case for Retail traders, as they do not have 100's of thousands of Dollars in their account they always use Stoploss, which is why retails loose their account if not use proper Money management.

Also retail traders use Retail broker or retail wing of a broker that allows them to have something called leverage, at a ratio of 1:30(standard for european traders!!) upto 1000/2000(unrealistic).  For me I have found 1:100 is the Best and max one retailer/retail trader should employ. Leverage meaning If you got  1:100 Leverage, For every $1 you get to trade $100, very powerful concept.  It 's a kind of loan provided by the broker(while in a trade only), available in the currency trading institutions/Banks/liquidity provider in ample quantity and unused!! Please note that while opening account some brokers got rules to have change leverage at their will, very dengerous for retail trader, so keep that in mind.  Brokers will employ this rule when some markets/pairs gets very thin liquidity or trading activity!!, please be mindful of that..

Broker selection is also a very very important part of a retail trader.  Internet is littered with forex brokers, so must be very mindful while choosing one for you.  There are at least 100's with execellent reputation and are in the business for 10 to 30 years!! I cannot disclose my broker here but in private I'm willing to disclose, this is because I'm a real trader not trying to benifit as being an agent of a broker that is called an IB(Intermediatory to the Broker in question).  Why there are 1000's of broker that let you trade online or over the internet ?? Because Most retail traders lose money!! hence brokers knows this and keep all retail(loosing traders) money in house, meaning not get the trades of the retail trader to the real interbank market, this way all the money lost by the retailer becomes brokers money!!, as You can see it's very profitable and free money for the broker, so there are 1000's of forex brokers with all kinds of attractive features to lure in the uninformed retailer or general populace!! Most retail brokers, track their clientele, meaning watch how you trade and can easily figure whether this retail trader is a real trader that learned the ropes/rules of Fx trading ediquately or not!!  This will enable the broker to put that traders inhouse i.e. broker act as a market maker regardless what they advertise being ECN or STP!!

So learn and take your time with a demo account before starting real trading.  It is so enticing that most while starting loose few $500 or $1000 account before being profitable!!, this includes me aswell!! I have also lost few thousand dollars while I was a beginner. But most lose interest when they lose money and think Forex market is a Gamblers arena, which is NOT TRUE in any form or shape!!