Chapter 4
The Mechanics of Currency Trading
In This Chapter
Understanding currency pairs
Calculating profit and loss
Executing a trade
Using different types of orders
The forex market has its own set of trading conventions, like how prices are quoted and orders executed, just like any other financial market. Then there’s the forex lingo and some FX-specific transactions. If you’re new to currency trading, the mechanics and terminology may take some getting used to. But at the end of the day, you’ll see that most currency trade conventions are pretty straightforward.
In this chapter, I take you through the basic mechanics of forex trading, starting with how currency prices are quoted, what it means to buy and sell, and how leverage works in margin trading. I also show how to execute trades and how your trading results translate into dollars and cents. Last but not least, I run through the various types of orders forex traders use to implement a trading strategy and how orders work in the real world.
Buying and Selling Simultaneously
The biggest mental hurdle facing newcomers to currencies, ...
