Forex Advice – Most Common Terms

Forex today’s forex advice, we will discuss the most used terms in forex. Today’s forex advice will include the definitions and examples of: The bid, The ask, the spread, the base currency, and the counter currency.

We think that this is pretty much the 5 most used terms. It is paramount that you know what each one means and how to utilize you knowledge when trading.

The Bid: The bid is the price that the market makers are able to purchase the base currency(we will get to that in a second). Some good forex advice is to remember that the bid is going to be lower than the ask.

The Ask: This is the price that the market makers will sell the base currency at.

The Spread: the Spread is the simply the difference between the bid and the ask. This is shown in pips. The difference in pips is the profit that the market makers will make.

The Base and Counter Currency:When reading currency pairs, there are two currencies represented. One example would be something like this CAD/USD 1.3000/8. When looking at this, the CAD(Canadian currency) is the base currency as this is what the currency pair is based off of. The counter currency would be the currency on the right. In this case, it is the US dollar.

So now that we have all of the common definitions down, let’s talk about how to read the rest of the currency quote.

CAD/USD 1.3000/8. So this means that the 1.3000 is the bid. The /8 represents the spread. To this means that the ask is 8 pips higher.

So there ya go. Now that you know how to properly read the currency pair, you can also tell you friends about all of the special definitions that you know!

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