He’s got an opinion. What now? Open your free Forex platform and start working on your opinion. Most traded currency in the world. The EUR, the first currency in the pair, is the basis and the USD is the counterpart. When you see a price quoted on your platform, it’s what a euro costs in dollars. You will always see two prices, one is the purchase price and the other is the sales price. The difference between the two is the distribution. When you click buy or sell, you buy or sell the first currency of the pair.
Let’s say that you think the EUR will increase the value against the USD, your pair is the EUR / USD if you think the euro will fall in value against the US dollar, you sell EUR / USD. Advertisement 3 If the purchase price of EUR / USD is 0.70644, and the selling price is 0.70640, then the spread is 0.4 pipes. If the transaction moves in your favor (or against), then once you cover the spread, it may be a gain or loss in your operation.
FRACTIONS OF A CENTER: IT WORKS WITH MARGIN
If prices are quoted in hundredths of cents, how can you see a significant return on your investment when you trade Forex? The answer is to leverage.
When you operate forex, you actually lend the first currency in the pair to buy or sell the second currency. With a market of US$ 5 billion a day, liquidity is so high that liquidity providers, big banks, basically allow it to operate with leverage. To operate with leverage, simply set the margin required for your operation aside. For example, if you trade with 200:1 leverage, you can trade $2,000 on the market by holding only $100 in the margin of your trading account. This gives you a lot more exposure while keeping your capital investment low.
But leveraging not only increases your profit potential. You can also increase your losses, which can exceed the deposited funds. When you’re new to the forex market, you should always start trading with small leverage ratios until you feel comfortable on the market.