How to Learn Forex - It was mentioned earlier that the currency is transacted in a currency pair. Before we go further, we will learn about the currency pair itself.Judging from the type, currency pairs are divided into two:1. Major Currency Pairs, or MajorsThat currency pair involving the major currencies and traded against the USD. Which includes the major currency pair is the EUR / USD, GBP / USD, AUD / USD, NZD / USD, USD / JPY, USD / CHF and USD / CAD.2. Cross Currency Pairs or Cross RatesThat currency pair that does not involve the USD. For example EUR / GBP, EUR / CHF, GBP / JPY and others.
The first currency mentioned we refer to as the base currency, while second currency we call the counter currency. When you perform a transaction BUY (BUY), then in fact you BUY base currency and at the same time SELL counter currency. Conversely, when you make a transaction BUY (SELL), then you do is SELL base currency and at the same time BUY counter currency. This is one reason why you could do a SHORT (SELL / SELL) in advance when the price falls. For example, when you do a SELL EUR / USD, then the price of EUR / USD down, the greater your benefits.
OK, you already know that no such thing majors and cross rates. Well, now you will learn how to read the price derived from the exchange rate of the currency pairs mentioned above.
Bid / AskIn forex trading, currency pair traded in a BID and ASK price basis. BID meruakan benchmark for you if you want to do transactions SELL, while the ASK price on the contrary, is a benchmark for you to carry out a transaction BUY.Writing the Bid and Ask is usually like this:
From the example above, the BID his is 1.30000, while the prices of its ASK is 1.30020. So if you want to perform a transaction BUY, then your transaction will be carried out at the price of 1.30020. Conversely, if you want to do a SELL transaction, then your transaction will be carried out at the price of 1.30000. It's easy?
You can also see that the ASK price is always higher than the BID. The difference between the BID ASK it is the spread.
BID is also often referred to as EXCHANGE BUY. That is the price used is the merchant if they want to BUY from you. Instead, ASK has another name as KURS SELL, which means that traders always use these prices when they will SELL it to you.
Thus, based on the example above, if you are going to buy EUR from merchant then the price is equal to 1.30020 per USD. Conversely, if you want to sell EUR to the merchant then the price is equal to 1.30000 per USD.
You can also see that the ASK price is always higher than the BID. The difference between the BID ASK it is the spread.
BID is also often referred to as EXCHANGE BUY. That is the price used is the merchant if they want to BUY from you. Instead, ASK has another name as KURS SELL, which means that traders always use these prices when they will SELL it to you.
Thus, based on the example above, if you are going to buy EUR from merchant then the price is equal to 1.30020 per USD. Conversely, if you want to sell EUR to the merchant then the price is equal to 1.30000 per USD.
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