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Forex Glossary
Here are some of the most common terms used in FOREX trading. Ask Price – Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote – e.g. EUR/USD 1.1965 / 68 – means...Read More
FOREX Trading: Risky Business
You can see the claims on some FOREX web sites, implying that FOREX is a risk-free pastime. No investment is risk-free. In FOREX you are trading substantial sums of money, and there is always a possibility that a trade will go against you. There...Read More
Spot forex Trading: Little Known Wealth Building Secret Of The Rich & Famous
If you search on the internet you'll find millions of investment programs such as real estate, stock trading, bond trading, mutual funds, CDs, auction programs and various internet programs. I have not done many internet income opportunities...Read More
The Miracle of Forex
My father, who owns a small parts store and garage for vintage British sports cars, called me up recently and droned on and on about how he is getting killed by the Euro. Confused as to how the Euro could possibly be affecting his small and...Read More
The Top Four Forex Brokers
This article contends that the best forex brokers are: Saxo Bank, GAIN Capital, GCI Financial Ltd., and CMS Forex. CMS Forex accepts no commission, demands a small amount of only $200 to establish a mini account, provides users with a Free Demo...Read More
An Explanation of Forex Trading
An Explanation of Forex Trading
by Eddie Tobey
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Forex trading means the simultaneous buying of one currency, and selling of another. The currency of one country is exchanged for that of another. The currencies are always traded in pairs such as US Dollar/Japanese Yen (USD/JPY), Euro/US Dollar (EUR/USD), Great Britain Pound/US Dollar (GBP/USD).
More than 80% of daily forex trading involves major currencies like Australian Dollar (AUD), British Pound, Canadian Dollar (CAD), Japanese Yen, Swiss Franc (CHF), and the US Dollar. Forex Trading is not centralized on an exchange. It is a 24-hour market, and trading moves from major banking centers like Wellington, Sydney, Japan, London and New York – in that order.
In Forex Trading, there is a bid price and an ask price, and the difference of the two is called the spread. The bid is the price at which buyers are willing to buy, and the ask is the price that sellers are willing to sell at any given time. The prices are always 5 digit numbers, irrespective of where the decimal point is placed. For example, EUR/USD has a bid price of 1.2641 and an ask price of 1.2644, thereby yielding a 3 pip spread. In another example, the
USD/JPY bid price is 107.09 and ask price is 107.12.
A transaction takes place when one currency is on the up, and another is going down. Choosing the right currency will ensure a profit.
Margin is collateral for a position. If the market moves downward, the forex trader will ask the investor for additional funds by way of a “margin call”. In case of insufficient funds, the trader will close the open positions immediately.
A “long” position is one in which the investor buys a currency at one price, with the expectation of selling it later at a higher price. A short position is one in which the investor sells a currency with the expectation of buying it back at a lower price, expecting the currency to fall. Every forex trading position taken means that the investor has gone long in one currency, and short in the other.
Forex Broker Info provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. Forex Broker Info is the sister site of Incorporating in Florida Web.
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