As a forex trader, you are speculating on whether one currency will rise or fall in price against another currency.
So “forex trading” can be defined as the process of speculating on currency prices to try and make a profit.
The value of a currency is influenced by economic, political, geopolitical events, and trade and financial flows.
Placing a trade in the foreign exchange market is simple.
The mechanics of a trade are very similar to those found in other financial markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.
What is How To Read a
Quote ?
Currencies are always quoted in pairs, such as GBP/USD or USD/JPY.
The reason they are quoted in pairs is that, in every foreign exchange transaction, you are simultaneously buying one currency and selling another.
How do you know which currency you are buying and which you are selling?
Excellent question! This is where the concepts of base and quote currencies come in
Base and Quote Currency
Whenever you have an open position in forex trading, you are exchanging one currency for another.
Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:
“Long” and Short
First, you should determine whether you want to buy or sell.
n trader talk, this is called “going long” or taking a “long position.” Just remember: long = buy.
If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price.
This is called “going short” or taking a “short position”.
Flat or Square
f you have no open position, then you are said to be “flat” or “square”.
Closing a position is also called “squaring up“.
