The life of a currency trader in the Forex market is ruled by the trends in the market. A trader has to pay close attention to the trends in order to profit from trading currency online. The market is analyzed by two major methods which are the fundamental analysis and the technical analysis. The fundamental analysis allows the trader to measure the stability of a currency while it is the technical analysis that helps the trader to identify the all important trends in the currency market.
It is the technical analysis that a trader turns to in order to take the necessary decisions regarding the trade of currency online. The technical analysis uses charts to show how the currency prices are changing and allows a trader to gather information as to the historical background of any given currency pair. The charts give a graphic and highly visual imaging of the price movement and all other details against a backdrop of time. Identifying a trend is the most important thing for a trader. Once he identifies a trend the best course of action is to find the direction of the trend and then to enter the market as the trend starts and exit it before the trend finishes. Although the price movements cannot be predicted with any certainty as some traders seem to think, a trader is able to get as much information from the charts as possible and then combine it with other technical indicators to confirm the best entry points and exit points.
The charts are a gold mine as far as information about a currency pair is concerned. A lot of traders concentrate solely on the prices and forget to take into account the time span involved. This is shown in charts according to how they are drawn up and can be minutes, hours, days weeks, months or years that it is based upon. A trend that shows in a five minute chart can be confirmed with an hourly chart for the same currency pair. This is due to the fact that longer time periods tend to be more reliable than their shorter time span cousins.
Traders can take advantage of up trends, downtrends or even sideways movements in currency prices. An up trend or a downtrend in the currency market is generally set to continue in the same direction. The ability of a trader to identify trends and then use it to maximize his profits from trading currency online is quite an art that has to be developed with time and practice.

As a novice trader you will be faced with a barrage of terms that make up the jargon of trading currency online. It is important that as a trader you understand the meaning of each term and what it means for your transactions. Knowing the terms which are used in the course can speed up your trading and thus give you a better edge over other traders. It could also mean the difference between profits and losses. Any trader who is serious about trading in the Forex market will endeavor to learn these without fail. The main terms of use can be listed as follows.
Currency pairs: This refers to the currencies that are either bought or sold in the Forex market. It is called a pair because they are always mentioned together to denote the buying of one currency which is normally done with the sale of another. For example if you see USD/GBP what this means is that the trader is buying USD and selling GBP simultaneously. The price that is given will show how much of the first currency the trader was able to buy with the second currency mentioned in the pair.
Base currency: This is the first currency in a pair and in the above example it will be the USD. This is the currency that the trader invests in.
Quote currency: This is the second currency that is shown in a currency pair and in the above example it will be the GBP. This is sometimes called the counter currency, secondary currency or the variable currency. It is the currency that is being traded against the base currency.
Pips; A currency pair is generally quoted with two prices which are taken to the fourth decimal place. A pip is the smallest unit by which price changes are measured.
Bid price/Ask price: These refer to the prices quoted in the currency pair. The first price shown is known as the bid price and the second is known as the ask price. It is this difference that is measured by the pip value.
Spread: The spread is the difference between the bid price and the ask price which is measured in pips.
Exchange rate: When one currency is being valued in terms of another different currency the resulting figure is called the exchange rate.
Opening a position/closing a position/holding a position: Opening a position is when a trader enters the Forex market and places his order and starts to trade currency online. Holding a position is what the trader does thereafter till he closes the position by taking his profits/losses and cashes out.
Margin deposit: This is the initial deposit a trader makes. Today, traders are even able to trade with small deposits with just a few hundred dollars.
Leverage: This is a concept that is present in most markets. But the leverage in the currency market is unique as it is very high. It could be anything and often we see excess on 400:1 and more being offered as leverage by brokers. This has the effect of augmenting profits. The losses will also be as big as the profits.