The first thing to notice about currency prices in the Forex market is that there are two of them, called the bid price and the ask price. The second thing to notice is that they dont favor you, the trader; they favor the broker, because thats how he makes his money.
The ask price is what you pay should you wish to purchase that currency pair. Using the GBP/USD as an example, lets say you believe the pound is going to strengthen against the U.S. dollar, meaning that the chart of the two currencies is going to go up on the graph.
In such a trade you would be purchasing the pound now at a lower rate (and by definition, selling the dollar) so that you can sell it later at its (hopefully) higher rate. And, since the pound is the base currency and it controls the direction of the trade, to purchase the pound means to purchase the currency pair. Such a trade is called opening a long position.
The bid price is the exact opposite: its what you pay should you wish to sell, or short, that currency pair. To continue the example of the GBP/USD, lets say you believe the U.S. dollar is going to strengthen against the pound, rather than the other way around. In this...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
