News & Blog
How To Earn Money While Trading Forex
- June 25, 2021
- Posted by: Admin
- Category: Blog
Learning about Forex Trading Skills is all good and well, but none of that truly matters unless you achieve what you have wanted to do from the start. This, in most cases, is of course making profit. Here at Smart Prime Academy we would like to explain how to earn money in this field, and what needs to be done to get there.
Be Aware Of How To Read A Forex Quote
When currencies are being quoted, they’re always done in pairs (an example being GBP/USD). The main reason they are quoted this way is because within every foreign exchange, you are purchasing one currency whilst selling the other.
You may now be asking; how do I know which one I’m selling and which one I’m buying? This is a perfectly understandable question, as it can seem complicated when you first look at it.
Base & Quote
In the example of GBP/USD, GBP is the first one and will be understood as the base currency. USD, being the second one, will be known as the quote currency. In simplest terms, the base currency on the left side is the reference element for the exchange rate of the pair. The second currency on the right is known as the quote currency.
When you buy, the exchange rate will tell you how much you have to pay in units of the quoted currency to purchase one unit of the base.
To put it simply, the base currency represents how much of the quote is needed for you to get one unit of the base.
Now you may be asking, with so many different types of currencies to trade, how do brokers know which currency to list as the base and which one to list as the quote? Luckily, the way pairs are quoted in the forex market is easy to understand. Currencies are quoted with a slash, separating both currencies from one another. This is the most common way to list it, but it may be used with a dash, a period, or nothing at all. Regardless of how its quoted, it all means the same thing.
Flat Or Square
This term is said within the context of having no open position. Closing a position is also classified as “squaring up”.
The Bid, Ask and Spread
Every forex quote is done with both a bid and ask. The bid is generally lower than the ask price.
The bid, by definition, is the price that your broker is offering to buy the base currency in exchange for the quote.
- Bid = best available price you can sell to the market.
The ask price, on the other hand, is the price at which your broker will sell the base in exchange for the quote.
- Ask = best price you can buy from the market.
What Is Spread?
Spread is just the difference between the ask and bid price. You can easily calculate this spread number by subtracting the smallest value from the largest one. For example, if your bid price is 1.1045 and your ask price is 1.1047, your spread would be 1.1047-1.1045.The total for the spread would then come to 0.0002 which equals 2 pips.
How We Can Help
We here at Smart Prime Academy want to do everything we can to make sure that you learn as much as possible about the forex market and its intricacies. That is why we provide you with these blog posts, as well as our highly professional Foreign Exchange Market Courses in Richmond Hill. To learn about how to join our online academy, be sure to call us at 1-877-870-0092 today. We look forward to hearing from you!