What is Forex trading

Consider the key terms of Forex trading, which without is impossible to imagine - buy (buy) and sale (sell).

Purchase (BUY) - an order to buy a currency pair (opening a long position or closing a previously opened short position). When buying, a trader assumes that the price of a currency pair will increase, as a result of which they will make a profit.

Sale (SELL) - an order to sell a currency pair (opening a short position). Used to capture falling prices

Thus, there is a simultaneous interaction of two traders: the buyer and the seller, the so-called "bulls" (traders speculating upwards) and "bears" (traders speculating downwards). In this confrontation, each side is waiting for the right moment to issue an order to close the deal, hoping to get the maximum profit. Such orders are called "warrants."

Order - a request sent to the broker to complete a purchase or sale transaction for a particular lot at the price specified in the order. That is, a purchase or sale will occur only when the price reaches the desired mark.

There are two types of orders:

1. Pending order - a trader’s desire to conclude a transaction at a price different from the current market price.
2. Market order (immediate execution) - the application of the trader to conclude a transaction at the current price. Buying or selling s executed immediately.

To make a profit in trading on Forex, traders use many strategies, tools, and depends on the lot with which you will enter into a particular transaction.

Lot - the amount of an asset in a transaction that is a multiple of the minimum lot that a broker operates by order of a client.

For example, if you originally bought $ 2,000 USD, then you need to sell exactly the same amount, but at the current price at that time. In different currency pairs, lots are valued differently, but usually the American dollar USD is the benchmark.

Lots are of several types and the price of one lot is 100 thousand units of the base currency.

For an illustrative example, take a lot for the USD / JPY currency pair (1 lot - 100,000 USD).