Forex Basics
If you are interested in trading in the forex market then it is essential that you know about a few forex basics. At trading training you will not only learn of the basics but you will also learn how to make the best of market situations to increase your profit. Training trading has put together a list of some definitions, basic terms as well as concepts that are widely used in the forex market. These basics are essential for every trader as it fully equips them on understanding and trading in the market. Trading training has put together a small list of the essentials that you would hear on a day-to-day basis when trading with currencies.
Foreign exchange market – This is a huge market where trading in foreign currency takes place. The market is operational 24 hours in a day. It is not a brick and mortar market, but trading and buying and selling of currencies take place online, though the phone or with the help of brokers.
Spot Market – This is a term used for currencies that are bought and sold at the current market rate.
Exchange Rate – Every currency has a value, and the value of one over the other is termed as exchange rate. For e.g. EUR/USD is 1.3200 in other words the Euro is around USD 1.3200.
Currency Pair - Trading training also explains what currency pairs are. It is generally two currencies for e.g. USD/GBP which makes for an exchange rate in other words where the USD is bought while the GBP is sold.
Base Currency – It is usually the currency that is the basic denomination for your account, and is the first that features in the pair. For e.g. USD/JPY where USD is the base currency.
Counter Currency – This is the second currency in a pair, for e.g. USD/JPY where JPY is the counter currency.
Sell Quote / Bid Price – Through training trading you will also learn about the Sell Quote which is also referred to as Bid Price. It is nothing but the sale price at which the base currency is sold.
Buy Quote/Offer Price – This is the price at which the base currency can be bought as is also referred to as offer price.
Spread- Training trading understands the important of spreads since this is where profit can be made. It is nothing but the difference between the buy and sell quote.
Pip- When a currency makes a small increment it is known as pip.