Currency is generally an accepted form of money, including coins and paper notes, which is issued by a government and forex trading software currency trading currency t within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade. Directly put, ‘What is the value of the GBP against the USD?
One currency normally has a greater value than the other. This is mostly reflected by a countries economic status. In the above example, the GBP is called the base currency and USD is called the quote currency. Conversely, when you sell the currency pair, you sell the base currency and receive the quote currency. So in the above example, the bid or buy price represents how many USD are needed to buy one unit of the GBP.
In previous articles, I mentioned go long and go short without properly explaining. That is what It basically means to go long or go short on a currency pair. GBP was going to gain value against the USD. GBP was going to lose value against the USD.
Traders buying currencies are referred to as Bulls. Traders Selling currencies are referred to as Bears. USD pair today, meaning the price is going up. USD pair and the forex chart is displaying the value of the GBP against the USD going up up and up. USD today meaning the pound price is depreciating against the dollar. Bid on the left Ask on the Right.
The ask price is also refereed to as the offer price. The broker or bank always buys currency at a cheaper price than they sell it. That is how they make their margin. Your broker offers the ask price, so in the above example the asking price for a trader to buy the GBP would be the value quoted on the right side. 0466, they would have to wait for the value to go up and above 2. 0466 in order to sell the pair for a profit. If the price remains exactly the same, they would have to sell it at a loss, because the broker will always buy at a lower price.
So if the value stays the same or lowers you will be losing money if you had bought the pair. The same applies if you sold the pair and the price went up instead. Currency Symbols always have three letters. The first two identify the country and the third the currency. All currencies and pairs normally have a Nickname. The Term on far right is the currency or pair Nickname. For example, the US Dollar is nicknamed Buck.
These Nicknames vary from trading centers in New York, London and Tokyo. Other currencies are classed as Minor Currencies and they are normally traded against a Major Currency. Majority of Fx Traders will be trading the Major Currency Pairs i. The major currency pairs also all contain the USD on one side. There are many local sites providing these types of local currency crosses.
Exotic Currency Pairs are currency pairs that are not common in the Foreign Exchange Market. Exotic currency is usually from developing countries such as parts of Asia, the Pacific, the Middle East and Africa. These often have huge spreads between the ask and the sell price. Exotic currencies are neither major nor minor, but they are still important in the Forex Market. Note: the exotics are not the best place to begin as a trader. Start with the majors and crosses first.
This is some great advice for a newbie. Register with one of our Recommended Forex Brokers and Get A FREE DEMO ACCOUNT and START TRADING TODAY! Curreny Trader – Trading With Clancy. Warning: Trading With Clancy blog was created for educational purposes only. Comments and opinions expressed herein are not to be construed as a recommendation to buy or sell anything.