Chapter 4
The Mechanics of Currency Trading
IN THIS CHAPTER
Understanding currency pairs
Calculating profit and loss
Reviewing rollovers and interest rates
Surveying bids, offers, and spreads
Using different types of orders
The currency market has its own set of market trading conventions and related lingo, just like any other financial market. 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.
Buying and Selling Simultaneously
The biggest mental hurdle facing newcomers to currencies, especially traders familiar with other markets, is getting their head around the idea that each currency trade consists of a simultaneous purchase and sale. In the stock market, for instance, if you buy 100 shares of Google, it’s pretty clear that you now own 100 shares and hope to see the price go up. When you want to exit that position, you simply sell ...
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