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Chapter 5, Part I. Where does the money come from in FOREX? Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 14, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Pipruit: Sir, I do not quite understand where the profit on a Short position comes from. It’s clear on Long positions – buy, wait until the price has risen, then sell at higher price and profit in your pocket. With short positions it’s not so clear.​

    Commander in Pips: Ok, I’ll show you this on the chart…

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    Pipruit: Wait a minute, it looks like I’m understanding it now. When my initial trade is “Sell”, in anticipation of a decrease in the exchange rate it is called a “Short”. I make money on the falling of the exchange rate. With “Long”, it is much simpler - it’s just a common trade Buy cheaper and Sell “at or better”.​

    Commander in Pips: You’re absolutely right – in a “Short” trade you make money on a decreasing of the rate, in a “Long” trade – on its increasing.

    Pipruit: Commander, also I’ve heard something about Bull and Bear markets and trades. Can you explain that?​

    Commander in Pips: Oh yes, don’t worry too much about it. A growing market (prices rising) is often named as a “Bull market”, a falling one as a “Bear market”. So, very often, opening “Long” positions can also be called opening “Bullish” positions. A “Short” one is named as “Bearish position”.

    And the last small topic for today –

    How to read the quote board?

    Ok, look at the picture below. This is a very typical quote board of a typical FX broker – what can you tell me about the data that it shows?

    Pipruit: Let’s see. Well, I see quotes for different pairs. Bid price and Ask price. Looks like we’ve discussed them earlier, but I forget all the details. These prices are different. I assume that the color stripe shows dynamic of the pair through the trading day – green line means appreciation of the rate, i.e. base currency, red line – depreciation, yellow means flat or near flat price action.

    EXAMPLE OF A BROKER’S QUOTE BOARD

    [​IMG]
     
    #1 Sive Morten, Dec 14, 2013
    Lasted edited by : Feb 7, 2016
    Nachoga and fran alvarez like this.
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