Saturday, April 25, 2015

CURRENCY PAIRS

A currency pair is a combination of two currencies. Let’s use a commonly traded currency pair as an example. If this is the first time that you have broken a currency pair down into its separate parts, it might be a bit confusing. Read this over a couple of times if you need to, or send me an email. So here it is, a currency pair:
GBP/USD
The above pair is the abbreviation for the Great British Pound versus the United States Dollar. The currency mentioned first in the pair (GBP in this example) is called the “base” currency. If the GBP/USD quote is 1.9000, then one British Pound will buy 1.9000 dollars.
When you buy the GBP/USD, you are betting that the GBP is going to move higher. That automatically means that

the US Dollar is moving lower. Duh, right?
If the GBP/USD moves lower, that means the GBP is losing value and the USD is gaining value. Duh, again, right?
The most important thing to remember is this: if you think the GBP is going to go up, then you buy GBP/USD. If you think the GBP is going to be weak, then you sell GBP/USD. How do you know if it is strong or weak? That’s what the training is all about.



































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