In the FOREX market, you buy or sell currencies. Make a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those of other markets (like the stock market). So if you have some experience in trading, you should be able to reap gains fairly quickly.
The war nerve in the trade in Forex is to exchange one currency against another in the hope that the price will change … What the currency you bought will increase in value compared to the one you sold.
How to read a quotation FX?
Currencies are always quoted in pairs, such as GBP/ USD and USD / GBP. This is because in every foreign exchange transaction, you buy one currency and selling another at the same time. Here is an example of an exchange rate of the pound sterling against the U.S. dollar:
GBP / USD = 1.7500 GBP / USD = 1.7500
The first currency to the left of the slash (“/”) is defined as the base currency (in this example, the British pound), while the second on the right is called the counter or quote currency (in this example, the U.S. dollar).
When buying, the exchange rate will tell you how much you must pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound.
When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.7500 U.S. dollars when you sell 1 British pound.
The base currency is the “information base” to buy or sell. If you buy GBP / USD, it simply means that you are buying the base currency and simultaneously selling the quote currency.
You have to buy the pair if you think the base currency will appreciate relative to the quote currency. You should sell the pair if you think the base currency will depreciate relative to the quote currency.
Originally posted 2013-09-10 07:37:28. Republished by Blog Post Promoter