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The entire world over, more and more people are using currency trading as a means to earn more money or to work from home. Some who partake in currency trading make great amounts of profit and others make a more average amount. However much profit you earn when trading currency online depends on how much investment you want to put in as well as how much time you are willing to put into it.
Online Currency Trading for Dummies: Basic Terms to Know
If you are going to be trading currency online you should know the basic terms. Firstly, you would have to know things such as exchange rates, supply and demand, interest rates, being “short and “long on currencies and what a PIP is.
Know What Are Exchange Rates
Exchange rates are the rates at which one currency can be bought using another currency, for instance, how many Dollars would it take to buy one Euro would tell you what the Dollar/Euro exchange rate is.
Understand Supply and Demand in Currency Trading
Supply and demand is quite simply what it says. It is the supply and demand of a currency that could influence the value of the currency. Currency trading depends greatly on the supply and demand of a currency.
Currency Trading for Dummies: Interest Rates
Interest rates would be your regular interest rates within a country set by the reserve bank. So the currency of a country would be governed by the interest rate of that particular country. High interest rates could potentially mean greater growth for traders. Listen to business news and read your business news section whether its online news or the newspaper.
Currency Trading for Dummies: Being “Short” and “Long”
Being “short” and “long” is also a very common term. Whenever you trade you are trading one currency for another. So when you trade Dollars to get Euros you are now “short” on the Dollars you gave, but “long” on the Euros you now get. Essentially a currency trader will always be “short” on one currency and “long” on another currency. In the same way the market can be “short” or “long” on a currency.
Where to Trade Online
To start trading currency online you would have to find a trading site you trust and can easily work with. Play around on some and see which one is most comfortable for you. Also look for trading sites hosted by local banks. The rule is, do not trade real money at first, rather familiarise with the whole system first using a demo account. Also make sure the software being used is up to date.