Forex Trading Course (Part 4)

, you want the base currency to fall in value and then you would buy it back at a lower price. This is called “going short” or taking a “short position”. Just remember:

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“How come I keep getting quoted with two prices?”All forex quotes are quoted with two prices: the bid and ask. For the most part, the bid is lower than the ask price.

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The bid is the price at which your broker is willing to buy the base currency in exchange for the quote currency trade.

. This means the bid is the best available price at which you (the trader) will sell to the market.The ask is the price at which your broker will sell the base currency in exchange for the quote currency.

This means the ask price is the best available price at which you will buy from the market. Another word for ask is the offer priceNow let’s take a look at some samples.

The difference between the bid and the ask price is popularly known as the spread.On the EUR/USD quote above, the bid price is 1.34568 and the ask price is 1.34588.

Look at how this broker makes it so easy for you to trade away your money.If you want to sell EUR, you click .

“Sell” and you will sell euros at 1.34568. If you want to buy EUR, you click “Buy” and you will buy euros at slow movement

In the following examples, we are going to use fundamental analysis to help us decide whether to buy or sell a specific currency pair.

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If you always fell asleep during your economics class or just flat out skipped economics class, don’t worry! We will cover fundamental analysis in a later lesson.

But right now, try to pretend you know what’s going onEUR/USDIn this example, the euro is the base currency and thus the “basis” for the buy.

If you believe that the U.S. economy will continue to weaken, which is bad for the U.S. dollar, you would execute a BUY EUR/USD order.