Education on Forex trading and financial markets for beginners and professional traders interested in earn money trading
In this article we will define two basic concepts for trading in Forex: the base currency and the quote currency.
The base currency is the first currency listed in a currency pair traded in the Forex market. Sometimes you can also see this term as primary currency (although this term is not very suitable for its meaning in economics). In accounting base currency is the one used to represent all company accounts.
For example, if we have the pair EUR/USD, the euro (EUR) is the base currency and the US dollar (USD) is the quote currency or counter currency. The price given for the pair represents how much is needed of the quote currency to buy one unit of the base currency or, which is the same, how much of the quote currency can be obtained when one unit of base currency is sold.
The exchange rate, also referred to as conversion rate or foreign exchange rate is the price at which a currency of a country can be converted (“changed”) in the currency of another country.
The system of exchange rates among currencies stems from the need of foreign currency by companies and nationals. In other words, the exchange rate comes from the movement of capital, goods, services and people across borders, that is, the existence of international trade. For example, when a company sells products to a foreign country, it is natural that this company wants to get paid in their national currency; therefore, the foreign company must buy the domestic currency of the manufacturer to pay the products purchased. There are also many situations in which anyone may need a foreign currency, for example, when traveling need currency of the destination country. The result is a foreign exchange market in which people, companies and other participants buy and sell foreign currencies.
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The Initial Jobless Claims indicator is a report that records how many people have applied for unemployment benefits in the United States, providing information on the state of the labor market of that country. This is a weekly published data, and provides information on how many people applied for unemployment benefits last week. Therefore, this report is also known as weekly jobless claims.
The report of the Initial Jobless Claims is prepared by the Employment and Training Administration of the U.S. Department of Labor, and is published on Thursday of each week at 13:30 GMT, with data from the previous week.
In the Forex market, currencies are traded in pairs. In these pairs each currency has meaning in relation to the other, so always stick together.
The two currencies in a pair are traded against each other. The rate or price at which these currencies are traded is known as the exchange rate. The exchange rate is regularly affected by supply and demand for currencies that make up the pair.
Regarding the issue of probability, a lack of understanding can lead to incorrect assumptions and predictions about the occurrence of certain events. One of these incorrect assumptions is known as the Gambler´s fallacy.
In the gambler’s fallacy, an individual mistakenly believe that the occurrence of a certain random event is less likely to occur after an event or series of events. This line of thinking is incorrect because the past events do not change the likelihood of certain events occurring in the future.
For example, consider a series of 20 coin tosses in which all have landed with the head side facing up: Under the gambler’s fallacy, a person can predict that the next coin toss is more likely to fall to the tail side facing up. This line of thinking is an incorrect understanding of probability, because the possibility that a coin lands heads or tails is always 50%. Each coin toss is an independent event, which means that each and every one of the previous tosses have no effect on future releases.
Island reversal is a trend change pattern which forms a gap on both sides. This chart pattern is most likely shown when the market trend proceeds to its last level. The name island reversal is obtained from the fact which the candlestick appearing alone, that is quite alike in the island. This chart pattern explains an increase in the volume amidst the primary gap and the following gap proceeding in the opposite direction.
The island reversal pattern is driven across the pre-market trading and pro trading as well. Generally, the island reversal chart pattern is described as a distinct trading activity that works within a range and moreover it is separated with a move. The separation is resulted due to an exhaustion gap and the opponent direction results with a breakthrough gap.
The carry trade is a strategy in which an investor sells a certain currency with a relatively low interest rate and buy another currency with a higher interest rate. The aim of this strategy is to get as profit the difference between the two interest rates, a benefit that may become attractive depending on the amount of leverage used. As the profit comes from the interest rate differential, you can make a profit even if the price of the currency does not change a single pip.
Although the Forex market operates 24 hours, is taken by consensus UTC 0 hours as the end and beginning of a new trading day. In Forex trading, at the end of each day is credited or charged to the account of the trader the spread between the interest rates of the two currencies of the currency pair in which the trader have open positions at this time (this is known as Rollover).
The “New Home Sales” is an economic indicator that measures sales of newly built homes. This is a monthly published data, which always refers to the previous month in which the Department of Commerce’s Census Bureau published the report. This report includes both the quantity and price statistics. It is considered a lagging indicator of market demand and also affect interest rates on mortgages.
It is considered as a sale of a new home any deposit or signing a contract, either in the year in which the house was built or the year after construction.