LESSON .1 Â
The Full Introduction To Forex
In Forex, you are trading the relative strength of one country's economy against another. You aren't buying a PAIRÂ you are "longing" one currency and "shorting" another.
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The Pair: Every trade involves a pair (EUR/USD).
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The Base (Left): The currency you are buying or selling.
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The Quote (Right): The currency used to measure the value.
The Goal: Buy the Base currency when you expect it to get stronger (or the Quote to get weaker), and sell it when you expect the opposite.
When you look at a chart, you see a number (like 1.0850). This isn't just a random digit it’s the Price of Admission. It tells you exactly how much of the Quote currency you need to buy 1 unit of the Base.
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Pips (Price Interest Point): This is your unit of measurement. It’s the "inch" or "centimeter" of Forex.
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Liquidity: Because trillions of dollars move daily, Forex is highly liquid. This means your Market Structure works better here than anywhere else because the "big players" (Banks) leave clear footprints.
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TERM |
WHAT IT ACTUALLY MEANS |
THINK OF IT LIKE |
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The Spread |
The small fee the broker takes for every trade. |
The "Cover Charge" at a club. |
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Going Long |
You "Buy" because you think the price will go UP. |
Buying a house to sell it later for more. |
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Going Short |
You "Sell" because you think the price will go DOWN. |
Betting against a team you think will lose. |
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Bull Market |
Prices are rising. (Bulls charge upward). |
An escalator going up. |
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Bear Market |
Prices are falling. (Bears swipe downward). |
A slide going down. |
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Margin |
The "down payment" you need to open a trade. |
A security deposit on a rental car. |
