Many people who live forex and CFD trading become successful traders. However, for those who are still beginners do not know how to trade forex, they often doubt the business of this one.
Forex and CFD trading is a real business and can be your main job. For beginners, the way of trading markets is sometimes experiencing obstacles, but after they understand and experience, it is very easy to trade.
If you want to learn CFD and forex starting from scratch, then you should understand some of the terms:
Lot is a measure as you trade contracts for difference and forex, in general you will be able to buy some lots to trade. The size of 1 lot is equal to 10,000 currencies. If you buy 1 lot USD then 1 lot USD = 10,000 USD. If you have 1 lot of GBP then 1 lot = 10,000 GBP.
In CFD and forex trading, there is also the term leverage, this term is the ratio used to determine the margin needed in transacting. The leverage is then multiplied by the contract size. This Leverage is a loan from your CFD broker given to traders. With this loan, the trader has a greater purchasing power.
Margin is a guarantee given in forex and CFD trading. This margin is also known as advance purchase. Similarly, when you want to buy a car, you also have to give up a down payment beforehand. In forex trading, this margin is a currency exchange with other currencies on a contract that has a guarantee. This trade is done online so that it is only the value it trades that does not involve the physical of the currency.
4. The Spread
CFD trading for beginners can be easier if they learn first term 'spread'. The term spread is the difference between the selling price and the purchase price. If the spreads are getting smaller then you can get a bigger profit.
Buy is a position where the trader can buy and this position can be done when the price will rise. Traders can buy at low prices and sell back when the price is expensive. In this way, the profit gained by the trader is greater.
Sell is a position where the trader can sell back and this position can be done when the price will drop. You can sell at an expensive price, after which you can buy back when the price is cheap.
Swap is a transaction that has passed the close market at 4.30, when the position has not been closed to close market then swap can be applied.
Some of the terms in CFDs can be learned first before starting. The way forex business is easy is to learn from the small thing as above.