FOREX QUOTES,PLACING ORDERS AND SOME BASIC TERMS

In forex currencies are presented in pairs, and every pair is treated as a product in forex. According to investopedia.com currency pair "The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. "The first currency in a pair is called the base currency, and the second currency in a pair is called the counter currency.

The quotes of a currency pair represent the value of the base currency in terms of counter or quoted currency. For example the value of the EUR/USD is 1.37500, which means 1EUR=1.37500USD.

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With the forex broker the traders see two prices sell and buy. The difference between the sell and buy price is called spread, which is the cost of the trade to the trader and commission to the broker.

The smallest unit of the currency value is point. In 1.37500 there are 137500 points. 10 points of the currency value creates a pip. For example if the value of the EUR/USD reach at 1.37700 from 1.37500 , we see an increase of 200 points or 20 pips.

In forex trading, actually no sell order is placed. When a buy order is placed that means the counter currency is converted into base currency. And when a sell order is placed that means the a base currency is converted into counter currency. Actually, we sell the currency that we hold when we close any orders. So, in every time we place only buy orders.

That is why, very often the term 'go long' is used instead of 'buy', and 'go short' is used instead of 'sell'.

From the above lines you will learn,

• What is currency pair?
• What are base and counter currency?
• How do currencies are quoted?
• What is pip?
• What is spread?
• What do we buy in forex?
• What do sell and buy order mean in forex?
• What do 'go long' and 'go short' mean?

Dear Traders, if you have any  questions, please drop a comment below.