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Understand basic forex terminology


David_Warner

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  • The type of currency you are spending, or getting rid of, is the base currency.The currency that you are purchasing is called quote currency. In forex trading, you sell one currency to purchase another.

The exchange rate tells you how much you have to spend in quote currency to purchase base currency.

long position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U.S. dollars to purchase British pounds.

short position means that you want to buy quote currency and sell base currency. In other words, you would sell British pounds and purchase U.S. dollars.

The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market.

The ask price, or the offer price, is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market.

spread is the difference between the bid price and the ask price.

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  • 3 weeks later...

That is good. Knowing Forex terminologies is good because when you understand basic things about Forex, you will not be thrown up and down in any manner by certain tutors or skill acquisition sites. That is also the main reason why it is in it's own important to take the basic knowledge about Forex so serious because it is the first step to success.

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  • 3 months later...

That is good. Knowing Forex terminologies is good because when you understand basic things about Forex, you will not be thrown up and down in any manner by certain tutors or skill acquisition sites. That is also the main reason why it is in it's own important to take the basic knowledge about Forex so serious because it is the first step to success.

But knowledge without experience is useless, you won't make profit from that knowledge unless you are the one who can speak very well and might want to create a product or guide or even a seminar for people who interest in foreign exchange. As for basic terminologies understanding, a trader will be able to discuss with someone who has experience without much problem.

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  • 4 years later...

A choice represents an agreement that gives its buyer the right, yet not the commitment, to buy or sell a fundamental resource a stock, a ware, a currency pair, or a record at a price at the very latest a specific date. It is an agreement with carefully characterized terms and properties. A choice is essentially an agreement firmly related to the basic resource. Thus, choices are called subsidiary instruments, which implies that they get their incentive from the estimation of the hidden base resource.

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On 7/30/2015 at 5:31 PM, David_Warner said:

 

  • The type of currency you are spending, or getting rid of, is the base currency.The currency that you are purchasing is called quote currency. In forex trading, you sell one currency to purchase another.

 

The exchange rate tells you how much you have to spend in quote currency to purchase base currency.

 

long position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U.S. dollars to purchase British pounds.

 

short position means that you want to buy quote currency and sell base currency. In other words, you would sell British pounds and purchase U.S. dollars.

 

The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market.

 

The ask price, or the offer price, is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market.

 

spread is the difference between the bid price and the ask price.

 

Thanks what about reliable FX brokers? Can you suggest any? I tried Hotforex, Tickmill and IB, no issues so far. 

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FX currency rates are determined by futures trading on the interbank market or public exchanges. However, there may be small differences in exchange rates between banks. The value of the currency is affected by global traders (banks, governments, traders, algorithms) 24 hours a week. For example, if market participants consider the euro to be a better investment than the US dollar, the value of the euro will rise against the US dollar. As a result, the exchange rate fluctuates.

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