tradersdna Academy – Forex Trading Education by Wayne Walker Part 7 – Basic Forex Terminology

In the seventh part of our Forex Trading Education video series, I’ll be explaining some basic forex terminology, and the concepts that underpin these terms.

In the video clip, which can be seen above or on the IntelligentHQ video channel, I provide a brief explanation of terms such as Bid and Ask pricing, the Spread, and Stop Out.

  • Bid Price: This is the price at which you can buy a currency pair, in the expectation that it will go up in price – a process known as ‘going long’.
  • Ask Price: This is the price at which you can sell a currency pair that you have previously bought. It is also the price that you pay if you want to ‘short’ the currency pair, which is a bet that the currency pair will fall in price.
  • The Spread: This is the difference between the bid and the ask price, and this is how forex brokers make their money. The spread should be considered what I call “your cost of doing business”, – the amount of money that you need to make on each trade just to break even. In general, you want to find a broker that offers tight spreads, as this will reduce your cost of doing business and therefore increase your profitability.
  • Stop Out: This is what happens when the broker closes all your positions in order to prevent you from going into the red. In general, this is not something that you want to happen, but it is however a useful and necessary safety feature when margin trading, which would otherwise carry the risk of putting you in a position where you lose more money than you have in your account.

The Traders DNA Academy

This video series is a part of the Traders DNA Academy, a fast-growing online resource for novice and experienced forex traders alike. We provide a range of educational resources under this banner, including:

  • Video Tutorials – Video is perfect for providing bite-size, visual explanations of what can sometimes be tricky concepts. These can be helpful as an adjunct to our written educational materials to help elucidate points we have gone over, or viewed in their own right as a quick way of enhancing or reinforcing your trading knowledge.
  • Resources for Traders – As well as tutorials and how-to guides, we also provide resources to help you to find out more and become a more informed trader, such as profiles of industry thought leaders, lists of the top social media forex voices, and interviews with leading forex professionals.
  • Platform Guides – Getting to know your trading platform well is one of the keys to success in the forex market. To this end, we provide in-depth guides to some of the top trading platforms, including MetaTrader 4.
  • Forex MBA – This is a step-by-step guide to mastering the art of forex trading, from the basics of how the market operates up to more complex analysis techniques and strategies. There are tests at the end of each module to check if you have taken everything in, and if you succeed you will receive online certification for your efforts.

Previous articles in this series

Traders DNA Academy – Forex Trading Education by Wayne Walker Part 1
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 2
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 3
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 4
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 5
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 6
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 8
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 9
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 10
Traders DNA Academy – Forex Trading Education by Wayne Walker Part 11