Basic Terms in Forex Trading

When it comes to forex trading, Euros Vs American Dollar or EURUSD is the most common pair traded. Basecurrency is the currency on the left, and it is the one you want to either buy or sell.

On the other hand, secondary currency is the one on the right, and it is the one normally used in making transaction.

For each pair, there are two prices – The ask price or the price for selling the base currency and the bid price or the price for buying.

Spread: This is the difference between the base currency and the secondary currency. Spread stands for the amount charged by brokers to open the position. The more currency is traded (high liquidity), the narrower will be its spreads. As lower liquidity normally comprises of increased volatility, the rarer the pair is, the wider the spreads will be.

Normally, a quote will be presented with four numbers after the dot. For example, look at the case of 1.2356. In the case of EURUSD, meaning that for every Euro the trader wants to buy, he will be required to invest 1.2356 US dollars. Any change in the currency value will normally be seen on the fourth figure after the dot, which is normally referred to as a pip.

The losses, gains, and spreads will normally be presented in pips.

 

 

Normally, a quote will be presented with four numbers after the dot. For example, look at the case of 1.2356. In the case of EURUSD, meaning that for every Euro the trader wants to buy, he will be required to invest 1.2356 US dollars. Any change in the currency value will normally be seen on the fourth figure after the dot, which is normally referred to as a pip.

The losses, gains, and spreads will normally be presented in pips.

Other terms used in online forex trading include Going short and Going long, which stand for selling and buying respectively.

Bullish Trader: This is the trader who speculates that the market will rise.

Bearish Trader: This forex trader is more on the defensive position.

The Bear Market and Bull Market describe how the market goes. While a bear market is normally decreasing, a bull market rises.

Professional and knowledgeable forex traders will decide their tactic based on the market trends and will follow all related events, in order for them to follow the changes in the market and make profit.

Gone are the days when a trader called his broker and give instruction on what to do or the action to be taken. Nowadays, forex trades are performed on software known as trading platform by the client directly.

Quite a lot of these forex trading platforms are available for Internet, Computer, and Mobile. Each trader has his own particular strategy, and should look for the trading platform that will allow him to do it in the best way possible – what he will feel more comfortable in.

Our top members are earning up to $4000+ per day by using the simple methods we teach them in our course.

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