When trading currencies we always buy or sell the first in the pair against the second. This is extremely important to understand. For example, when expressing the US Dollar against the EURO it is usually paired like this:
EUR/USD
"The takes $1.3432 US to buy one Euro"
In this case the Euro is the first (or base) currency and therefore, if we think the Euro will appreciate against the USD we buy this pair. If we believe the Euro will depreciate against the USD we sell this pair - in essence selling the Euro against the USD.
BID/ASK SPREAD
The bid/ask spread is the difference between the bid (or sell price) and the ask (or buy price). In the above example we can see that if we bought this pair we would do so at 1.3432. If we then sold it immediately we would do so at 1.3430 therefore losing 2 pips (.02 of a cent). This is called the spread and varies from pair to pair and can fluctuate. This variation depends on the provider and trade platform you choose for your currency trading.
INTEREST AND CARRY TRADES
At first glance this seems a little complex, however, it's actually fairly simple. Depending on the interest differential between the two countries that make up the currency pair interest is either debited or credited. For example, if the Bank of England (BAE) sets rates at 5.75% and the Bank of Japan (BAJ) sets them at only 0.5% then obviously holding British Pounds (GBP) over Japanese Yen (JPY) will make you interest. Therefore, buying and holding the GBP/JPY pair will credit you interest each day. The opposite is true as well, selling and holding this pair with these rates would lose you interest each day. Still not clear? No problem, we have a special course on interest and carry trades.
Learn more about the Interest and Carry Trade Course
DECIDING WHEN TO BUY OR SELL
Well, this is the hard part. We could devote an entire sight to this! Instead, check out our courses, online trading rooms, and our one-on-one coaching.
Learn more about our courses
Learn more about our online trading rooms (OTRs)
Learn more about our coaching program
CHOOSING AND USING A PLATFORM
Need help choosing a platform? Let us know what you are looking for and maybe we can help recommend something for you. Ask us!
Most platforms these days are getting fairly user friendly. Using them are generally easy once you get the hang of it, however, if you are having trouble we provide a unique service... together we can set-up your platform of choice for you right in your home. Ask us how! Give us a call, or hit the chat button to the right.
WANT TO LEARN MORE? TAKE A LOOK AT OUR FOREX COURSES !
* Some information is compiled from public sources and believed to be reliable but is not guaranteed as to its accuracy or completeness. No responsibility is assumed for the use of this material and no express or implied warranties are made. Nothing contained herein shall be construed as an offer to buy/sell, or as a solicitation to buy/sell, any security, commodity or derivatives instrument. Instruments such as Futures, Forex, Options, and CFD trading involve a substantial risk of loss and is not suitable for all investors. Please carefully consider your financial condition prior to making any investments.
