The Foreign Exchange market, also called FOREX, is the global currency trading market. The daily volume ofForex trading is more than $5.5 trillion. It makes this the biggest and most exciting financial market in the world. Forex Trading works with pairs of currency where you buy one currency and sell the other. If the currency you buy increases against the currency you sold then you make a profit otherwise you make a loss. That’s the simple basic of Forex Trading.

Some Important Terms in Forex Trading

 Base and Quote Currency
 The Spread
 Pips
 Leverage
 Going Long
 Going Short

These are some important terms to understand when you want to deal with Forex Trading.

Base and Quote Currency

Forex works with pairs of currency so the first currency listed in the forex pair is called the base currency while the second currency is called the quote currency. Base currency is the currency that you are buying when you trade the forex pair.Quote currency is the currency you are selling when you trade the forex pair.

Working of currency pairs

If the base currency rises against the quote currency, then the price of the pair increases. If it drops, then the price of the pair decreases.

The Spread

The spread is the difference between the buy and sell prices quoted for a forex pair.

Pips

Pip is a form of measure which is used to track the movement of the forex pair. A pip, short for point in percentage, is a very small measure of change in a currency pair in the forex market.

Leverage

Leverage is the ability to use something small to control something big. Specific to forex trading, It means you can have a small amount of capital in your trading account which can be controlling a larger amount of Forex trade in the market. Leverage in Forex Trading means borrowing a certain amount of money for investing. In case of trading, the money is usually borrowed from a broker.

Going Long

When trading in forex currency, if you feel that the base currency will increase against the quote
currency then you can buy the pair (going long). This can be done to make profits.

Going Short

When trading in forex currency, if you think the base currency will weaken against the quote currency
then you can sell the pair (going short).

To conclude, Forex Trading requires you to keep learning and investing time in trading before you can become expert and keep making profits on a regular basis. We can also help you understand how the Forex market works in detail.

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