10 Tips for Trading Currency Pairs in 2017

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  1. Notice, that when you trade currency pair derivatives, you don’t trade underlying; you trade a derivative of this market.
  2.  The currency pair shows how much of the quote currency is necessary to purchase one unit of the base currency, when it’s been published with an exchange rate. For example, EUR/USD = 1.5467 indicates that one Euro can buy 1.5467 US dollars.
  3.  The first currency listed in the currency pair is called the base currency; the second currency is called the quote or counter currency.Worldwide currencies
  4. When selling a currency pair, the exchange rate shows how many units of the quote currency you will receive when you sell one unit of the base currency.
  5. By enforcing these strict standards on how to refer to currency pairs, there is a reduction in mistakes and it is easier to keep exchange rates organized and clearly understood.
  6. The bid price is the rate that the broker is willing to pay for the currency pair. This is the rate you receive if you sell to the market.Major currency pairs
  7. The bid price is always less than the ask price, because the broker pays less than they receive for the same currency pair. This difference is referred to as the spread and it is how the broker generates the majority of its revenue.
  8. The ask price is the rate your broker is willing to sell at and it represents the rate you must pay to buy the currency pair.
  9. The bid price is always shown before the ask price. The difference between the two prices are mostly very small, so brokers generally only display the last two digits when they show the ask price.Understanding the currency pairs in Forex
  10. Each currency pair listed by the broker is accompanied with an exchange rate showing the bid and ask price for the currency pair. In this example, the bid is 1.4745 dollars to each Euro, while the ask is 1.4746 dollars to each Euro.

Know some extra tips? Feel free to share them in the comments! Also, don’t miss our features about what stock you should buy if you are investing and top 10 binary options to trade with.

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