Forex Investment and Currency Trading

Every trade should be part of a thought-out strategy. A strategy give you the discipline to ride winners and cut losers an even adjust to an unforeseen event. Only expert, seasoned trading veterans should trade on a “feeling”. At that point most would tell you they have identified a unique strategy that works. Otherwise, “feelings” are often just personal biases that cloud the decision-making process.
The best traders always write out their trading strategy before they enter any market. This prevents them from searching for trades or rationalizing a trade by analyzing previously unrelated data. Objective analyses must be done before [...]

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A cross-currency pair (or cross, for short) is any currency pair that does not have the U.S. dollar as one of the currencies in the pairing. But the catch is that cross rates are derived from the prices of the underlying USD pairs. For example, one of the most active crosses is EUR/JPY, pitting the two largest currencies outside the U.S. dollar directly against each other. But the EUR/JPY rate at any given instant is a function (the product) of the current EUR/USD and USD/JPY rates.
The most popular cross pairs involve the most actively traded major currencies, like EUR/JPY, EUR/GBP, [...]

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One market convention unique to currencies is rollovers. A rollover is a transaction where an open position from one value date (settlement date) is rolled over into the next value date. Rollovers represent the intersection of interest rate markets and forex markets.
Currency is money, after all
Rollover rates are based on the difference in interest rates of the two currencies in the pair you’re trading. That’s because what you’re actually trading is good old-fashioned cash. That’s right: Currency is cold, hard cash with a fancy name. When you’re long a currency (cash), it’s like having a deposit in the bank. If [...]

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Most online forex brokers provide real-time mark-to-market calculations showing your margin balance. Mark-to-market is the calculation that shows your unrealized P&L based on where you could close your open positions in the market at that instant. Depending on your broker’s trading platform, if you’re long, the calculation will typically be based on where you could sell at that moment. If you’re short, the price used will be where you can buy at that moment. Your margin balance is the sum of your initial margin deposit, your unrealized P&L, and your realized P&L.
Realized P&L is what you get when you close [...]

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