basic terminology forex trading

A variable spread will condense and widen as market conditions and liquidity change. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread. Margin, margin is the term given to the amount of money required in your account in order to open a trade. Leverage gives the trader the ability to make meaningful profits on the normally miniscule daily currency movements, and, at the same time, risk only minimal capital on a given position. This way, you have fixed a profit.28 GPB.

As a result, you have 1006.28 GPB. A bearish investor who wants to profit when prices are trending down will enter a short position, betting that prices will extend losses. No additional margin is required to hedge a position. If we are currently trading gold, then gold is the trading instrument. The key here is to find positive ratio for your strategy. The spread value is different for each currency. Because of the involvement of two different currencies"d in different ways for the FX options, sometimes is said not only that a call option on EUR/USD is traded, but could be specified which currency will be bought and which sold- EUR call/USD put. Bid and Ask price, bid Price, the bid is the price at which the market (or your broker) will buy a specific currency pair from you. Dollars to buy 1 euro. If we take, for example, GBP/USD pair, here the United Kingdoms pound (GBP) stands for the base currency and the United States dollar, also known as greenback, stands for the counter currency. Bulls and Bears what are they. This way he increases the margin of profit when he is right, relative to the amount he loses if was wrong.

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