To every beginner forex trader out there; how many times did you end up stumbling upon words like "spread," "bid," "currency pairs," etc. while reading trade articles? While these words might perplex you, they are also the fundamental terms of the forex world.
Do you want to learn more about these words? Then take out your pens and diaries as RightFX, your best trading partner and the fastest-growing broker, has listed a few of them in the most discernible way.
Though this is a currency trade, we cannot buy or sell single currency. RightFX explains that the trade takes place in currency pairs. In the pair, the first is the base currency and the second is the counter-currency.
For e.g., in the currency pair USD/JPY, when buying the currency pair, you are buying the US dollar and selling the Japanese Yen and when selling the pair, you are buying the Japanese Yen and selling the US dollar.
Currency Exchange Rate
The exchange rate shows the price of the base currency expressed in terms of the counter currency. Therefore, it is called price. For example, the exchange rate of USD/JPY is 1.25. It means one US dollar costs $1.25. If there is a rise in the exchange rates of currency pairs, it means the base currency is appreciating against the counter-currency and vice versa.
Bid and Ask price
To explain this most simply, RightFX lets you know that each currency has two exchange prices, viz., the bid price and the ask price. The bid price states what buyers are willing to buy and the ask price refers to what sellers are willing to sell.
Pip is the acronym for "Percentage in Point" and refers to the smallest increments at which an exchange rate can move up or down. Most of the time, one pip is the fourth decimal place of currency pairs. Forex traders usually use this term when talking about profit and loss.
Going Short and Long
These are the most commonly used words in the forex market. RightFX clarifies that going short means selling, whereas going long means buying the currency pairs.
Founded in 2015 by Ravirajsinh Vaghela, RightFX has done a lot of forex education work for a myriad of beginner traders. RightFX's beneficial and quality services like transparency in exchange, no commissions on deposits and withdrawals, expert advice, copy trading, providing the best trading platforms to its clients, etc., have allowed a million people to join the forex market with RightFX.
(The above story first appeared on LatestLY on Apr 18, 2022 10:34 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).