By: Michael A. Jones
If you have started your Forex trading training you may initially have a challenge with understanding how orders are placed. I remember when I first started reading about the Forex and practicing in a demo account, it took me a while to understand how stops and limits worked in relation to price.
This article sets out the main rules governing the placement of orders with a free graphic download in the resource box at the end which you can keep on your desktop and refer to at anytime until the rules have 'sunk in'. You will find this lesson extremely important if you are in the early stages of your forex trading training.
Here are the basics:
1. In each currency pair, the first currency is the base currency which you either buy or sell. For example, in the case of EUR/USD, if you believe the euro is going to strengthen against the US dollar you would place a BUY order (go long). If you believe the dollar will strengthen against the euro, you would place a SELL order (go short) for the EUR/USD currency pair.
2. In your dealing station you will notice two prices quoted for each currency pair, a BID price and an ASK price. The difference in the two prices is known as the pip spread the dealer takes from every trade. For the major currency pairs this can be between 3-5 pips. NOTE: When you place a BUY order you will enter the trade at the ASK price. When you place a SELL order you will enter the trade at the BID price.
[Read full article]
This article sets out the main rules governing the placement of orders with a free graphic download in the resource box at the end which you can keep on your desktop and refer to at anytime until the rules have 'sunk in'. You will find this lesson extremely important if you are in the early stages of your forex trading training.
Here are the basics:
1. In each currency pair, the first currency is the base currency which you either buy or sell. For example, in the case of EUR/USD, if you believe the euro is going to strengthen against the US dollar you would place a BUY order (go long). If you believe the dollar will strengthen against the euro, you would place a SELL order (go short) for the EUR/USD currency pair.
2. In your dealing station you will notice two prices quoted for each currency pair, a BID price and an ASK price. The difference in the two prices is known as the pip spread the dealer takes from every trade. For the major currency pairs this can be between 3-5 pips. NOTE: When you place a BUY order you will enter the trade at the ASK price. When you place a SELL order you will enter the trade at the BID price.
[Read full article]
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