Learning The Basic Terms in Forex Trading
Trading in Forex Exchange – or Forex – is a thing that becomes so popular in nowadays. We invest our money by buying currency to trade. Which means, we buy a currency and sell it when the value is higher than we first buy. To help you know more about this kind of trading, we have some information that you can read below.
Learning the basic terms
Here, you should learn about the basic things of Forex. There are some terms that you must understand before trading in Foreign Exchange. Such as the exchange rate, long position, short position, bid price, ask price, and spread. Besides, you need to understand the type of a currency which you are spending in. Here, we will elaborate those terms in order to give you important information to understand the basic terms.
The first is the Exchange Rate. The term has a meaning which tells us how much we spend in the currency to purchase other currencies. The next is long position, this term means that you purchase base currency and then sell your quote currency. For example, you want to sell your British pounds to purchase Japanese yen. Another term is short position, which is the opposite of long position. So, you purchase quote currency and sell your base currency.
The next is to ask the price, which means the price that you set when you want to sell your base currency to change it for the quote currency. Here, this term is considered as the best price that you can purchase in the trading market. Another term that you must know is bid price. What you need to know is, this term is the opposite of ask price. So, this term means that you will purchase base currency as an exchange for the quote currency. That bid price will be the best price when you want to sell your quote currency in the market.
Decide the currency you will spend in
Because the Forex Exchange is elastic, we must up to date about the economic condition of a country. Here, it will be useful when we want to buy and sell currency. For example, when the economy of Japanese continues to weaken, the Japanese Yen will be affected and it is not good. So, you can sell your Yen in an exchange for another currency from other countries which have strong economy. Besides, you can see the politic condition. Why? Because it will affect the value of currency in a country.
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