Forex

The forex trading strategy: portfolio diversification

The forex trading strategy: portfolio diversification


The trading of the currency, which is seen as one of the best strategies and should be the first thing a trader needs to happen when investing in online trading. They are taking their first steps uForex know to avoid all risks that are always around the corner.


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In fact, it has a diverse portfolio, you can mount a variety of assets such as risky.

But what is diversification? This means investing in different currency pairs, in order to reduce the risk of a possible loss of work.

Forex trading is always happening with currency pairs, because when a position you are buying one currency and another ticket trading (currency) or vice versa opens: You sell the currency and buy another). Therefore, when the term "trade in EUR / USD" is heard, it means that traders buy one of the two currencies (EUR or USD) and sell other (or vice versa).

To open a long position with EUR / USD (as I believe it will be a price increase of this pair), it means I'll buy a euro while selling the same amount (compared to the current value transmission) dollars.

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Below you can see a table with 18 currency pairs traded on the Forex market (Before showing the most used currency, but as we have already explained, the operation of foreign exchange always occur at the same time using two currencies, then the currency pair):

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In fact, each pair has a rate of supply/demand, which is called the "Bid / Ask rate"; This is the value that can be purchased and the value at which you can sell a currency pair at a given time.

The price of "offer" is the maximum price that customers want a currency pair to pay to acquire it.

"The issue of" price is the minimum price that retailers with a currency pair that you want to get paid for the sale

This means that:

'A trader can buy and sell $ 1 euro 1.1167 (purchase) price.

'A trader can buy and sell $ 1 euro 1.1168 (bid price)

-The Difference (broadcast call) between rates (OPC) and the application rate (ask) shows a level of liquidity 2 currencies are trading. Generally, the lower the spread, the better the liquidity (or ongoing operations)

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