How to trade?
When you buy/sell one currency against another, it means you open a long/short position on this pair. For example, the current price of EUR/USD is 1.1000. If you expect the euro to appreciate against US dollar, you open long position on EUR/USD. This is a common Forex transaction.
As some time passes and the price of EUR/USD rises, you close the position and get the profit. The amount of profit depends on how much the rate of this currency pair has increased during this time and the size of your position.
If your assumption was wrong and EUR/USD declined after you open a long position, you will have a loss. Same as with profit, the size of your loss will depend on how much the rate of this currency pair has fallen during this time and the size of your position
Traders who expect the prices to rise are called ‘bulls’, while those who expect a decline are referred to as ‘bears’.
Other articles in this section
- Demo accounts
- Forex brokers
- MACD (Moving Average Convergence/Divergence)
- Position size, level of risk
- Margin, Leverage, Margin Call, Stop Out
- Swap and rollover
- Transaction, profit, loss. Types of orders
- Economic calendar
- When is Forex market open?
- Bid and Ask price. Spread
- Calculating profits
- What are pips and lots?
- Currency pairs. Base and quote currencies. Majors and crosses
- What technical tools do I need for trading?
- The advantages of Forex market
- What is Forex?