Monday, April 23, 2018
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How Forex Work

Learn Forex Trading

Forex trading is the buying and the selling of specific currency pairs.

Trade Basics


This is a foreign exchange rate for the euro versus the U.S. dollar.

The first listed currency is called the “base currency” and the second listed currency is known as the “term currency”, or “quote currency”.

In FX trading, the base currency is the basis for any buy or sell action.

The above exchange rate tells us that 1.07 US dollars are required to purchase one euro. If you are buying EUR/USD, you are buying euros and selling American dollars. If you are selling EUR/USD, you are selling euros and buying American dollars.

Click here for more information on Trade Basics.

Bid / Ask

On your trading platform you will see two different prices for each currency pair.


 BID 1.23582     ASK 1.23597
These two different prices are known as the “Bid” and “Ask” prices for the currency pair.

The Bid price is the price on the left and is lower than the Ask price. It is the price at which you can sell a currency pair.

The Ask price is the price on the right, and is also known as the “Offer price.” It is the price at which you can buy a currency pair.

The difference between the two prices is known as the spread.

According to the Bid/Ask spread above you can sell 1 euro for  1.23582  and you can buy 1 euro for 1.23597

      Click here for more information on Trade Basics.

Opening and Closing Positions

FX trading involves both buying and selling. You open a position with the first action you take, whether that is buying or selling a currency pair. Closing the position you have opened requires you to perform the exact opposite action.

To close an open position on the MT4 or cTrader, simply click on the ‘Close’ button. This will automatically perform the opposite action. MT4 and cTrader platforms also allow for hedging, so you can open opposite positions on the same currency pair.

Our MT5 platform does not allow hedging. Choosing to sell a pair that you have already bought will automatically close your existing open position.

Remember that you buy a currency pair at the Ask price and close your position at the Bid price. If you are selling a currency pair, you are doing so at the Bid price and closing your position at the Ask price. Chart prices display only the Bid price of a currency pair by default.

    Click here for more information on Trade Basics.

Go Long / Go Short

To “go long” means to buy a currency pair with the expectation that it will gain value. Selling the currency pair once it appreciates will result in profit.

To “go short” means to sell a currency pair, expecting that it will depreciate. Buying the pair once it depreciates will result in profits.

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