It is very important to get to know Forex Terminology in order to trade knowledgeably. The terminology is important to be able to read currency price quotes.To get more news about Free Forex Signals, you can visit wikifx.com official website.

Remember: in Forex, each currency is compared to another currency.

Base Currency – The main instrument of a pair. The first currency to appear in a currency quote (on the left). USD, EUR, GBP, AUD, and CHF are the most popular bases.

Quote (Counter) – The pair’s secondary instrument (on the right). One would ask, “How many Quote units do I need to sell in order to buy a single Base unit?”Remember: When we execute a Buy order, we buy Base by selling Counters (in the example above, we buy 1 GBP by selling 1.4135 USD). When we execute a Sell order we sell Base in order to buy Counters.

Forex quotes always consist of two different prices: the Bid price and the Ask price. Brokers receive different Bid and Ask offers from the interbank market and they pass the best offers to you, which are the quotes you see on the trading platform.
When buying currency, you operate an Ask Price action (you relate to the pair’s right-hand side) and when selling currency you are doing a Bid Price action (you relate to the pair’s left-hand side).
Buying a pair means that we sell Quote units in order to buy Bases. We do so if we believe that the value of the Base will go up. We sell a pair if we believe that the value of the Quote will rise. All Forex trading is done with currency pairs.
The data is constantly running live. Prices are only relevant for the time they appear. Prices are presented live, moving up and down all the time. In our example, the Base is the euro (left). If we sell it in order to buy the quote currency (right, in our example, dollar), we will sell EUR 1 in exchange for USD 1.1035 (Bid order). If we wish to buy euros in exchange for selling dollars, the value of 1 euro will be 1.1035 dollars (Ask order).

Like every currency pair, this pair contains 2 currencies, euro and dollar. This pair expresses the “dollars per euro” condition. Buy 1.1035 means that one euro buys 1.1035 dollars. Sell 1.1035 means that by selling 1.1035 dollars we can buy 1 euro.
Long position – Go Long or buying a long position is done when you expect the currency rate to go up (in the example above, buying euros by selling dollars, expecting the euro to go up). “Going long” means to buy (expect the market to rise).

Short position – Go Short or Carry on selling is done when you expect a decrease in value (compared to the counter). In the example above, buying dollars by selling euros, hoping the dollar will go up soon. “Going short” means selling (you expect the market to go down).
CAD (Canadian dollar)/USD – When we believe that the American market is getting weaker, we buy Canadian dollars (placing a buy order).

EUR/JPY – If we think that the Japanese government is going to strengthen the yen to shrink exports, we will sell euros (placing a sell order).
Important: it is advised to focus mainly on “Stop-Loss” and “Take Profit” orders (see below). Later on, in more advanced chapters, we will make a thorough study of them, understanding exactly how to use them in practice.

Market order: Buying/Selling execution at the best available market price (the live price quotes presented on the platform). This is obviously the most basic, common order. A market order is actually an order you pass to your broker at the real-time, current prices: “buy/sell this product!” (In Forex, product = pair).

Limit entry order: A Buying order beneath the actual price, or selling order above the actual price. This order allows us to not sit in front of the screen all the time, waiting for this point to appear. The trading platform will automatically execute this order when the price reaches the level we have defined. Limit entry is very efficient, particularly when we believe that this is a turning point. Meaning, at that point the trend will change direction. A good way to understand what an order is is to think of it as setting your TV converter to record e.g.. “Avatar”, which is due to start in a couple of hours.

Stop entry order: Buying order above the existing market price or a selling order beneath the market price. We use a Stop entry order when we believe there is going to be a price movement in a clear, specific direction (uptrend or downtrend).