Exchange rate fluctuation

I’ve noticed that exchange rates fluctuate constantly throughout the day. You probably knew that already because you’re not financially illiterate like me. I’m just now beginning to learn about currency trading so I’ll make discoveries that are obvious to other people in the know but that weren’t so obvious to me before. Until a few days ago the term “exchange rate” wasn’t part of my daily vocabulary, and if you’d asked me to define it I wouldn’t have been able even though, as it turns out, I’ve known what an exchange rate is since the first time my parents sent money to me from America when I was a little girl and living in the country where I was born. I would go to the store with my US dollar and be able to buy twice as many things as I could with a dollar from my own country. That was because a US dollar in my country was the same as about $2.50 of my country’s dollars. So whenever I had a US dollar I knew I had about $2.50 in my local currency.

So I’ve downloaded this forex trading platform from etoro.com. It’s the 3rd application I’ve downloaded since deciding I want to learn about forex trading, and it’s the first application I’ve actually been able to figure out how to make a trade on. With the other 2 I simply didn’t know where to begin. With etoro’s platform I was able to get started without effort. I’ve been running it for a few hours now just studying what goes on, how the exchange rates fluctuate and how you gain profit and incur loss based on the fluctuation direction and value.

I ‘ve just learned what I suspect is an important lesson. I closed a trade I’d opened a while ago. I had issued an order to buy the US dollar against the Canadian dollar. The exchange rate kept rising and falling between 1.0093 and 1.0098 Maybe that’s the spread and not the exchange rate?). Honestly I’m not sure what those values reflect yet. I know each rise or fall is called a pip and for each pip my gain/loss percentage rises or falls depending on the direction the pip takes and the position I took when I opened the order. I’ve waited patiently for it to get to a figure above the opening value of 1.0098, and when it reached 1.0100, I closed the trade; but as it turns out I delayed too long in clicking “OK” to seal the close, and by the time the close was completed, I was back at my opening position of 1.0098 which meant I ended up with no profit. So the important lesson I’ve learned is to act swiftly once you’ve decided to close a position.

Now I will wait for the rate to fall back to about 1.0093, which of course there is no guarantee it will do any time soon. If it does before I’m ready to call it a day I will initiate another order to buy the USD against the CAD.

Applying concepts learned:

I think I took a long position on the US dollar and a simultaneous short position on the Canadian dollar. In time I’ll know better. For now I’m doing a lot of guessing but it’s an interesting way to pass the time and if nothing else I will come away knowing a bit more about forex trading than I knew about the subject 7 days ago, which was absolutely nothing.