Forex Basic Information
The most popular currency pair traded is the euro vs the US dollar called EURUSD. The currency on the left is called the base currency, and is the currency we want to buy or sell. The court is the second currency, and is the currency we use to execute the transaction. Each pair has two prices – the selling price of the base currency (sell) and the purchase price (buy). The difference between these two is called a spread, and represents the amount that brokers calculate to open the position. The more a currency is traded (high volatility) the narrower the spread is. The rarer the couple is, the wider the spreads.
Usually a listing is presented with four digits after the comma, for example 1.2356. In the case of EURUSD, this means that for every euro the trader wants to buy, you must invest $ 1.2356. Any difference in the value of the currency is usually not noticed until the fourth decimal place, also known as pip. The spreads, profits and losses are usually shown in pips.
Other terms from the world of Forex trading are going long and going short, which stands for “buy” and “sell”. A trader who speculates that the market will rise is a “bullish trader”, and on the other hand is the “bearish trader” that is more on the defensive side. Accordingly, the terms “bull market” and “bear market” are used to describe how the market is moving. A bull market is on the upward trend, and a bear market is falling.
Experienced traders will determine their strategy on the basis of market trends and ensure that they follow all relevant events so that they can anticipate changes in the market and make a profit.