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  • Beginner
  • Intermediate
  • Advanced
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  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Personal Psychology Questions
    2 Topics
  5. Psychology for Beginners
    7 Topics
  6. Intermediate
    Identifying Scams
    2 Topics
  7. Brokers for Beginners
    5 Topics
  8. Technical Analysis
    13 Topics
  9. Market Structure
    5 Topics
  10. Completion
    Risk Management for Beginners
    8 Topics
  11. Fundamental Analysis
    9 Topics
  12. Advanced
    Using Indicators
    6 Topics
  13. Technical Analysis (Part 2)
    8 Topics

Basic Forex Terminology

If you’re new to this market, the terminology can be quite daunting! It’s imperative to familiarize yourself with the basic terms and definitions; otherwise, you may end up completely lost before you’ve even begun. You might start to believe we’re out here trading bulls, bears, and even ticks!

As we mentioned earlier, currencies are typically quoted together in pairs. You’re essentially assessing which country is stronger in comparison to the other. Now that you know this, let’s run through some definitions that you need to know when trading these pairs!

The first currency in a pair is known as the BASE CURRENCY, while the second currency is called the QUOTE CURRENCY. So if you see the pair EUR/USD, EURO is the Base Currency and the US Dollar is the Quote Currency. You are TRADING based off the BASE CURRENCY.

Example: If you believe that the Euro will rise in comparison to the US dollar, you should buy EUR/USD, as the Euro is the base currency. If you believe the US dollar will rise in comparison to the Euro, you should sell EUR/USD, because you are trading based on the base currency. If the US Dollar rises, that means Euro has to drop, so again, you would sell EUR/USD.

Just as we talked about in the earlier sections, below is how you would read a currency pair quote:

EUR/USD – 1.25650 (1 Euro = 1.25 US Dollars)
GBP/USD – 1.40422 (1 British Pound = 1.40 US Dollars)
USD/CAD – 1.22050 (1 US Dollar = 1.22 Canadian Dollars)