Forex Rank assumes no responsibility or liability for any errors or omissions in the content of this site. The sites information contained herein is not intended to be a source of investment or financial advice. It is advisable you understand how these instruments work and you can afford the risk of losing your money. CFD trading carries a high risk of losing money. On average 70% – 90% of retail investors lose money when trading CFDs. Never trade monies you cannot afford to lose. The difference between these new purchase price and the selling price becomes your gain.Ĭopyright 2022 Forex Rank - Forex trading carries a high level of risk and it is possible to lose more money than your initial investment. So, you want to sell it in order to purchase it back when the price falls. This is when you sell a currency because you think that it will decrease in value. These trades are illustrated in the chart below. What it means is that you are taking a long position in Euro. If you purchase the euro and sell the dollar, it is represented as EUR/USD. You can add to that position by making additional transactions in the same direction or reduce that position by closing out existing trades.Ī long position is when you buy a currency with an anticipation that it would increase in value and you can make some gains when you subtract your purchase price from the selling price. This means you’ve effectively taken a position on the future direction of the exchange rate of the currency pair you made a transaction in. When you make an initial trade in the forex market, you enter into a position. It will equally increase your risk if you place a losing trade. Leverage will boost your profits if you place a successful trade. If your broker offers a leverage of 1:10 and your account balance is 1,000 dollars, what it means is that you can trade a position size of up to 10,000 dollars. Leverage: is the amount of money you borrow from your forex broker to boost your trade volumes. Margin: is the amount of money you have in your trading account when opening a trade. Pip: The pip is the base unit of a currency pair or 0.0001 of the quoted price. So, in a forex market what this means is that you speculate on price movements instead of purchasing and selling real money. It is a contract utilized to represent the price movement in the financial market. Spot Forex: is the type of forex trading that involves purchasing and selling of the actual currency.ĬFD: means “Contract for Difference”. Spread: is a difference between the bid price and the ask price. The ask price is the best price you’re happy to purchase a currency. Your bid is the best price you’re happy to sell your quote currency.Īsk price: or the offer price is the price at which a broker is willing to sell a base currency to purchase a quote currency. Short position: is when you have to purchase the quote currency and sell the base currency.īid price: the price at which a forex broker is willing to purchase and sell a quote currency.
Long position: is when you purchase the base currency and sell the quote currency. Quote currency: The quote currency is the currency you want to purchase. We have provided those terms and their meanings here:īase currency: The base currency is the currency you want to sell.
HOW TO START FOREX TRADING IN THE US HOW TO
To Learn how to start trading forex the first thing you need to do is to learn the basic forex terms.
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