Forex Basics Articles

leverage Let's say you decided to invest in FOREX market. For starters, you have to open a margin account (minimum account size) with a FOREX broker of your choice. As soon as you deposit your money you will be able to enter the trading market. Your broker will let you know what is the requirement per position (lot) traded.  

what is lotLet's start with an example that everyone can relate to. When you buy eggs in the grocery shop, it is impossible to buy just one egg, isn't it? Eggs are sold in a set of 12 or more.Now, back to FOREX world!

long shortThere are two more equations to remember:

Long = buy

If you want to buy a currency (meaning that you want to BUY the base currency and SELL the quote currency) at one price and sell it later on at a higher price, then you are in trade's talk taking a "long position" or "going long".

bid ask spreadAll Forex quotes display two prices, the bid and the ask.

BID: The price of the base currency that the dealer is willing to pay in exchange for the quote currency. In simple words, the bid is the price at which you (trader) will sell.

base currencyThe first currency in a currency pair (the one on the left side from the slash "/ ") is called base currency. Base currency always has a value of 1. The second currency in the currency pair (the one on

the right side from the slash "/") is called counter currency or quote currency. 

majorsMajors

Most commonly traded currencies are referred to as MAJORS. Below is the list of currency abbreviations which we recommend to memorize.   

exchange rateConfused with currency exchange!

How can you trade something that you can't see or touch? Since trading currencies isn't something physical FOREX might seem confusing in the beginning. One way to brush the confusion away is to think of buying a currency in the same way as you think of buying shares in a particular country.  

forex tradingWhat is FOREX? 

FOREX stands for Foreign Exchange or, in other words, currency trading market. Currently FOREX is the largest and fastest growing financial market in the whole world with a daily volume of almost 3 trillion dollars. Quite a number, won't you say? That is 30 times higher then the turnover of all USA equity markets combined! Other names for FOREX include "Retail forex", “FX” , "Spot FX" and even just "Spot".

pivot pointsPivot points strategy has been around for a long time and is very important for forex traders. Pivot points show us the levels at which the direction of price movement may change. With couple of simple calculations forex traders are able to have a general idea where the price movement is heading to during the day. 

fibonacciFibonacci numbers! Doesn't that sound a lot like an enormous chapter in high school mathematics' book? If that's what you think then you are absolutely right. We are indeed talking about those kinds of numbers. Fibonacci numbers are a sequence of numbers formed as follows:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55… etc