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When you are trading forex (foreign exchange) spot you are trading the value of one currency against another. The spot market is the market for immediate delivery (itâs actually 2 days delivery for most currency pairs and one day for CAN/USD; but think of it as the market price). The first currency in the pair is the one you are buying or selling. For example, if you buy the Euro/US Dollar you are buying the Euro and selling the dollar. You would do this if you thought that the Euro would appreciate against the USD. If you thought that the Euro was going to depreciate against the dollar you would sell the EUR/USD and when you bought it at a lower price you would lock in your profit. The amount you pay to trade is the spread. If the spread is $1.2100/$1.2102 this means that you can sell it at 1.2100 and buy it at 1.2102. These 2 pips are what you pay per round turn. If you trade 1 to 1 leverage by trading a $200 lot with your $200 account (very conservative/perfect for a nubie), you will pay $.02 per pip or $.04 per round turn and you will make $.02 per pip it moves in you direction (after you cover the 2 pip spread). After you have proven to yourself that you can make money trading forex, then you probably want to increase your leverage to about 10 to 1. 50 to 1 is available in retail forex houses that are regulated in the US but this type of leverage should only be used by pros in very select situations; if this leverage is used regularly you will blow out your account quickly.
You will need to study about forex before trading. Trade a demo account (this is free) before you risk real money. You can use technical and/or fundamental analysis. If you donât know what this means, study more. Review past charts and study the price action.