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Learn to Speak Forex

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Learning to speak Forex isn't half as hard as you might think,to help you I'm going to run through some of the terms specific to placing Forex trades.

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Learn to Speak Forex

  1. 1. Sometimes it feels like your learning a new language. There are so manywords and phrases related to Forex that it sometimes feels like yourback in school, sat in class again, not paying attention, listening to yourteacher talking complete gibberish.Well, fact is, learning to speak Forex isnt half as hard as youmight think.To help you, Im going to run through some of the terms specific toplacing Forex trades.Base CurrencyThis is the first term all forex traders need to understand. This is thefirst currency quoted in any currency price.For example, if we were talking about USD/JPY then USD is the basecurrency.On the other side of that you have....Quote CurrencyYes you guessed it, this is the second currency quoted in a currencyprice.so if were talking about the USD/JPY, then JPY is the quoted currency.Both the Base and Quote currency are very important phrases when itcomes to learning Forex. These next two phrases are equally important.Buying LongWhen youre buying one currency against another, youre said to be longon that currency.So, if your buying say, the USD against the JPY, youre said to be long
  2. 2. on the USD.Going long on something just means that you expect the price to rise.Selling ShortGoing short is when you sell the base currency against the quotecurrency.Youre selling the currency in the hope that you can buy it back when theprices are cheaper.You CAN make money even if a currency falls.Spot Market/Spot PriceYoull often hear the word spot mentioned in regard to forex trading,either in reference to the spot market or the spot price.Generally a spot market is one in which the financial instrument (in ourcase foreign currencies) are traded and delivered immediately.So this means in a spot Forex market, the trades themselves areexecuted on that exact day.The spot price merely refers to the prices of the currencies as they arerecorded in the spot market.If you choose to spread bet the Forex market, you dont need to worryabout this, as the money we trade through our accounts are settled onthe day of the trade.The SpreadThe spread is the difference between the buy and sell price of acurrency.So, if the GBP is quoted as 1.5049/1.5052, the spread is 0.0003
  3. 3. this is how the spread betting companies make money as the price youbuy or sell back your trade will always be effected by the spread.This is only a handful of terms you need to be able to speak forex butits these phrases you need to start your foundation on starting tounderstand the language of Forex and trading.Ill be covering these phrases in more detail in future updates and alsosharing some more terminology in the future.Happy studyingChris (admin)  

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