Forex Trading Tips | Learn Strategies, News & Tools

 How Does Forex Trading Work? Understanding Currency Pairs and Orders

once you understand what forex trading is, the next step is learning how it works. The forex market runs on currency pairs like EUR/USD or GBP/JPY. You’re always buying one currency and selling another.

Understanding Currency Pairs:

• Base currency: The first in the pair (e.g., EUR in EUR/USD).

• Quote currency: The second (e.g., USD in EUR/USD).

• Example: If EUR/USD = 1.1000, 1 Euro = 1.10 US Dollars.

Bid and Ask Price:

• Bid: Price you can sell at.

• Ask: Price you can buy at.

• The difference is called the spread.

Types of Forex Orders:

• Market order: Instantly buy or sell at the current price.

• Limit order: Set a specific price to buy or sell.

• Stop-loss order: Automatically closes a trade to limit loss.

Trading forex is simple in theory, but it takes practice and strategy. In our next post, we'll break down the most common forex trading strategies for beginners.