How forex brokers cheat traders

I was cheated by a forex broker yesterday. When I placed 2 identical trades on 2 separate brokerage accounts.

The price on one account went on to take profit, while the price on my second account froze until it eventually turned against me and stopped out. Which makes market manipulation just another method brokers use to cheat traders.
If you want to add something on the topic of the legally cheating brokers the traders or have some questions, please, use the commentary form below.

Forex blog

First-hand forex trading experience and information about foreign exchange market that will be useful to traders

How can forex brokers cheat you legally?

There are many reports of scam brokers in the forex industry. “” companies attract customers’ funds and then simply run with them or they create unjust trading conditions, under which every trader loses money constantly. Those can be classified as true scams and are plain illegal. They deserve their own subject and are discussed throughout the internet widely. But, unfortunately, legit (registered and regulated) forex brokers have a developed arsenal of methods to get more from their traders in quite unethical way. Here I’ll try to list some of them.

“no fees, no commission, no hidden costs” – those are good words for the commercials but in reality every broker has a legal right to cut some extra pips or dollars in its favor from your position. I know at least 4 such methods:

Spread widening – favorite of all forex brokers. Spread widening usually happens during the periods of very high volatility. Broker may fail to allocate your position at a price it quotes (even if it’s completely ) and protects himself by imposing a wider than usual spread on the trader. There’s nothing wrong with that if, of course, the broker does it honestly. In reality nothing stops brokers from applying wider than needed spread to earn several pips from the traders. What can you do to avoid spread widening? Choose a broker that’s not known for excessive widening or simply try not to trade during the periods of high volatility (important news releases).

Slippage – isn’t dishonest itself, as the broker’s liquidity providers may change prices pretty fast and broker may simply have no choice than to execute your order at a slightly worse price. But some brokers use slippage for their own advantage and offer you to buy a currency pair at a slightly higher (or sell at a slightly lower) price than they could. The difference is their instant profit. It’s impossible to find a broker without slippages but you can try joining one with as little of them as possible. You can also try to avoid trading with market orders and switch to stop/limit orders; if you use eas, apply reduced slippage parameter in orders.

Disproportionate swaps (overnight interest rates). Brokers charge and pay overnight swaps depending on the difference between the interest rates associated with the currencies of the currency pair and set by the central banks. Unfortunately, the difference isn’t always strict – if the broker should charge the swap from trader, it will charge more than required, but if the broker should pay the swap, it will pay less than required. When the difference is quite low (for example, currently EUR/GBP has 1.0% and 0.5% interest rates; USD/JPY has 0–0.25% and 0.1%), the trader will have to pay swaps both ways – no matter if one is long or short on the pair. This trick can be avoided by trading strictly intraday, going for account, choosing a broker by studying their trading conditions for better swaps.

Overleveraging isn’t really a dishonest method of brokers – it’s usually traders who just fall for the bigger volumes. And the brokers are glad to offer those bigger volumes, as it will increase their earnings per pip of spread. Remember that and don’t overleverage yourself. If you can afford it – trade without leverage at all (1:1).

If you want to add something on the topic of the legally cheating brokers the traders or have some questions, please, use the commentary form below.

9 responses to “how can forex brokers cheat you legally?”

Very good article. Very straight to the point. Clear and concise. Hope to read more articles from you regarding the basics of forex.

Sometimes when we take a position, it is beyond ask line and bid line. It is not spread widening, it is spread stealing.

Admin reply:
january 27th, 2012 at 10:02 am

I was cheated by a forex broker yesterday. When I placed 2 identical trades on 2 separate brokerage accounts. The price on one account went on to take profit, while the price on my second account froze until it eventually turned against me and stopped out. Which makes market manipulation just another method brokers use to cheat traders.

Andriy moraru reply:
june 12th, 2014 at 10:09 pm

First, there is nothing legal in price manipulation.
Second, why do you think it was manipulation by the broker? Brokers use different data feeds, so their price quotes are not necessarily identical.

Some get your stop loss by walking down to the location where you have your stops set up. The market is 10 pips above on all of the other websites. I have three MT4 ECN brokers accounts and all are getting traded by me some with EA’s and some manually and some on demo trade with an EA that I develop. You can see the extension of the tick on the tick chart or the one minute chart.

Andriy moraru reply:
march 21st, 2015 at 6:31 pm

I would not call stop-hunting a legal practice. Manipulating the forex rates inside the trading platform to put traders into loss is a criminal activity.

Hi, if the spread is increased from 21 to 199, in GBPUSD, with no market all, no volatility, and they say it’s due to “lack of liquidity”, is it a scam, or not? Many times, from the late hours of friday, and the early hours of sunday.. Is it legal? I don’t think so.. Some people say it’s legal..

Andriy moraru reply:
september 12th, 2016 at 1:13 pm

Not only this is legal, it is also quite normal. I would worry if a broker did not widen spreads during those periods and not result in huge slippage / execution failures instead.

How forex brokers cheat traders?

The forex market has evolved a lot since the days before the retail forex market existed. Every day a new forex broker open up shop, and every day new forex trader fall into their traps.

That is not to say that every single forex broker is a scam – that is simply not true. However, unfortunately, there are many brokers who take advantage of new traders by promising them things they cannot deliver upon.

Whether the broker is offering exclusive bonuses to open an account, extraordinarily high leverage with which to trade, or competitive spreads on the various currencies, many forex brokers make promises and then deliver nothing other than disappointment.

It is important that traders understand how the whole forex broker thing works. Depending on the type of broker, it is a common occurrence for your broker to take the other side of your trade. What this means is that when you lose, they gain and so their best interest is to make you lose. Now, does that sound like a broker you want to depend on for customer support and a stable trading environment?

Some of the tricks a forex broker will play on traders is execute the trader’s requests with a delay so that they gain from the late response, as well as other tactics to make the trading experience all that more difficult.

I am not even going to talk about the full fledged scams out there that actually take a trader’s money and do not allow them to withdraw funds after they made some nice profits. Sounds pretty insane but that is the unfortunate reality of the forex market.

It is for this reason that reading forex brokers reviews and doing research before choosing a forex broker is not a luxury, it is a necessity every forex trader cannot afford to miss.

How forex brokers cheat traders

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How forex brokers cheat traders?

The forex market has evolved a lot since the days before the retail forex market existed. Every day a new forex broker open up shop, and every day new forex trader fall into their traps. That is not to say that every single forex broker is a scam, that is simply not true. However, unfortunately, there are many brokers who take advantage of new traders by promising them things they cannot deliver upon.

Whether the broker is offering exclusive bonuses to open an account, extraordinarily high leverage with which to trade, or competitive spreads on the various currencies, many brokers make promises and then deliver nothing other than disappointment.

Some of the tricks a forex broker will play on traders is execute the traders requests with a delay so that they gain from the late response, as well as other tactics to make the trading experience all that more difficult.

I am not even going to talk about the full fledged scams out there that actually take a traders money and do not allow them to withdraw funds after they made some nice profits. Sounds pretty insane but that is the unfortunate reality of the forex market.

It is for this reason that reading forex reviews and doing research before choosing a forex broker is not al luxury, it is a necessity every forex trader cannot afford to miss.

Currency trading for dummies cheat sheet

Foreign exchange (or forex) markets are one of the fastest and most volatile financial markets to trade. Money can be made or lost in a matter of seconds; at the same time, currencies can display significant trends lasting several days, weeks, even years. Most importantly, forex markets are always moving, providing an accessible and target-rich trading environment.

Choosing a broker for currency trading

Online currency trading is offered by dozens of different retail trading brokerage firms operating from all over the world, so you have many options to choose from. Here are some key questions to ask when you’re choosing a broker:

How good are trading executions? The key to evaluating any brokers is the speed and reliability of your trade executions. Are you consistently able to trade at the price you’re trying for? If you’re trying to sell, and your trade request fails, and you’re offered a lower price, you’re probably being requoted. (requoting effectively means you’re trading on a wider spread than you bargained for.) does your broker offer price improvement on limit orders? For stop-loss orders, the brokerage’s execution quality comes down to the amount of slippage experienced when prices gap following data or news announcements. You should expect some slippage on stop-loss order executions — the question is, “how much?”

How are orders filled? Find out exactly how your stop-loss or take-profit orders are filled. Is a stop-loss sell order filled when the bid price matches the stop price, such as a selling stop at 10 triggered by a price quote of 10/13? Are stops guaranteed? If so, are there any exceptions to such guarantees? What’s the policy for filling limit orders? Does the market bid price need to match the price of the limit order to sell, for example? A reputable broker will have clearly defined order execution policies on their website.

Are dealing spreads stable in all market conditions? Most forex brokers offer variable spreads these days. When market liquidity is high, the spreads will be tightest. During volatile market conditions and around major news events, spreads will naturally widen. However, the amount of variability can really differ among brokers, so make sure you understand how wide spreads can go when the market’s really moving.

Look on a broker’s website to see if they publish their execution statistics, which can give you more insight into their execution quality — including speed, the percent of trade requests that are successfully executed, and the opportunity for price improvement. Remember: tight spreads are only as good as the execution that goes along with them.

What is the commission structure? Most online forex brokerages provide trade executions without charging trade commissions. Instead, the broker is compensated by the price spread between the bid and the offer. A few brokers offer a commission-based pricing structure coupled with narrower trading spreads. If the brokerage charges a per-trade commission, you need to factor that cost into your calculations to see if it’s really a better deal than a spread-based commission.

How much leverage does the firm offer? Too much of a good thing? In the case of leverage, yes. Over the past several years, the maximum leverage available to retail traders has been reduced by regulators. For example, in the united states, the maximum available leverage is 50:1. In some markets outside the united states, such as the united kingdom and australia, 200:1 leverage is available. Generally speaking, firms offering excessively high leverage (higher than 200:1) are not looking out for the best interest of their customers and, more often than not, are not registered with a major regulatory body.

What trading resources are available? Evaluate all the tools and resources offered by the firm. Is the trading platform intuitive and easy to use? What charting tools are available? What newsfeeds are available? Do they provide live market commentary on a regular basis? What type of research does the firm provide? Do they offer mobile trading? Are you able to receive rate alerts via e-mail, text message, or twitter? Are there iphone/ipad apps? Does the firm support automated trading? Does the platform offer robust reporting capabilities, including transaction detail, monthly statements, profit-and-loss (P&L) reports, and so on?

Is 24-hour customer support available? Forex is a 24-hour market, so 24-hour support is a must. Can you access customer service firm by phone, e-mail, and chat? Are the firm’s representatives licensed? Knowledgeable? The quality of support can vary drastically from firm to firm, so be sure to experience it firsthand before opening an account.

Is the firm regulated, with solid financials? In the united states, online currency brokerages are regulated by the national futures association (NFA), which is the self-regulatory body subject to commodity futures trading commission (CFTC) oversight. Other geographies with solid regulatory frameworks include the united kingdom/europe, australia, japan, hong kong, and singapore — ideally you should trade with a broker that is regulated by at least one of these regulatory agencies.

Who runs the firm? Management expertise is a key factor, because a trader’s end-user experience is dictated from the top and will be reflected in the firm’s dealing practices, execution quality, and so on. Review staff bios to evaluate the level of management and trading experience at the firm. If the brokerage doesn’t tell you who is running the show, it may be for a reason.

Grasping the fundamentals of currency rates

Knowing the fundamental drivers of currency rates is the foundation of understanding price movements. This is very important to understand if you want to trade currency as an investment. Here are some suggestions:

Get to know the major economic data reports from all the major economies.

Understand the importance of expectations versus actual outcomes. Anticipate alternative outcomes to better gauge how the market is really reacting.

Stay aware of the pricing in and pricing out of market expectations that occurs in advance of data and events.

Factor incoming data and news into the major fundamental themes of interest-rate expectations, economic-growth prospects, inflation, and structural developments.

Be aware that technical and position-related themes can overwhelm the fundamentals.

Identifying currency trading opportunities and creating trading plans

Identifying trading opportunities and planning each trade from start to finish is essential to success in currency trading. When you trade currency as an investment tool, remember to:

Maintain trading discipline by formulating — and sticking to — a complete trading plan: position size, entry and exit (stop loss and take profit) before you enter a trade.

Always trade with a stop-loss order. Decide on the stop loss before you’re in the trade and don’t move it unless it’s to protect profits.

Identify trade entry and exit levels in advance through technical analysis.

Understand how each currency pair’s prices move and what drives the prices.

Determine position size based on the trade setup and your financial risk-management plan.

Be patient — currencies move around a lot. Wait for the market to allow you to enter your trade strategy.

After you’ve invested your time, energy, and risk capital in a trade, your work has only just begun. Managing your trade while it’s active is just as important to a successful outcome. Stay alert, be flexible, but stick to your trading plan.

How does forex trading work?

Updated: 12th january 2021

You may want to start this new year trying different types of investing. But with lots of different markets to invest in, it can be hard to know where to focus your attention. If you are starting to explore different options and wondering what forex trading is, then we are here to help.

What is forex trading?

Forex trading, which is the same as currency trading, is the conversion of one currency into another.

It is one of the most actively traded markets in the world. Individuals, banks and businesses carry out millions of forex transactions every single day.

Here are some key things you need to know about forex trading:

It’s global

There is no central exchange for forex trading. It’s not like you are using the london stock exchange.

Instead, it is traded via a global network of banks, dealers and brokers. Which means that trading happens 24/7, monday to friday.

Prices are quoted in pairs

When looking at currency prices, you will find them in pairs. The currency you are selling and the one you are buying.

One currency is the base currency, the other is the quote. The difference between the two is known as the spread.

In very basic terms, you would buy a currency pair if you thought the base currency would strengthen against the quote currency. You would sell if you thought the base was going to weaken against the quote.

The market can be volatile

The extended trading hours and the global nature of forex trading mean that it can be quite volatile.

Prices can be affected by things such as interest rates or government policies. And as forex traders are in it for the profit, price movements on some currencies can be quite extreme.

Is it legal in the UK?

Forex trading is completely legal in the UK. In fact, we are known for our regulation and reliable companies.

If you are interested in dipping your toe into the forex trading pool, then maybe look for an FCA-regulated broker. This will then offer you some protection, and you can be confident that they are a straight-shooting business.

Why trade this way?

You may be wondering why you should use forex trading when it can seem confusing and volatile. Well, it’s those characteristics that mean that you can potentially make big gains from it.

The volatility of forex trading means that you could find yourself making a decent sum of money speculating on price movements. However, be warned: this could also work against you, and you could expose yourself to losses.

Meanwhile, the 24-hour nature of the market means that you can take advantage of different active sessions. You are not tied into a central exchange, so you can make the most of the freedom.

Finally, it is a big market. Large numbers of buyers and sellers are trading away at any one time. So if you decide to try forex trading, you will find that transactions are completed quickly and easily.

And ‘spreads’ (don’t worry, I did mention them earlier) are tight. So the underlying market price of the pair won’t need to move a huge amount in order for you to be able to make a profit.

Who is forex for?

Most importantly, here’s our warning: forex trading can be extremely challenging for beginners, as there is a very high level of risk involved. While it’s not strictly impossible as a newbie to grow your money pot through it, you would need to really know your stuff and be hands on.

This is mainly because of how quickly the market changes. Surges in currency prices and the speed at which things can change mean that you could likely lose money if you are not monitoring your investments closely. It’s also true that forex providers often push huge levels of leverage – and at high leverage, even small market fluctuations can wipe out a trader’s entire position.

For these reasons, we don’t believe forex trading is suitable for novice investors on the whole.

Where can I find more information?

If you are keen to learn more about different types of trading or investment, take a look at our top picks for share dealing accounts. Or check out our five tips for a diversified portfolio if you’re a new investor.

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Chart patterns cheat sheet

Like we promised, here’s a neat little cheat sheet to help you remember all those chart patterns and what they are signaling.

We’ve listed the basic forex chart patterns, when they are formed, what type of signal they give, and what the next likely price move may be. Check it out!

Chart pattern	forms during	type of signal	next move
double top	uptrend	reversal	down
double bottom	downtrend	reversal	up
head and shoulders	uptrend	reversal	down
inverse head and shoulders	downtrend	reversal	up
rising wedge	downtrend	continuation	down
rising wedge	uptrend	reversal	down
falling wedge	uptrend	continuation	up
falling wedge	downtrend	reversal	up
bearish rectangle	downtrend	continuation	down
bullish rectangle	uptrend	continuation	up
bearish pennant	downtrend	continuation	down
bullish pennant	uptrend	continuation	up

You never know when you’re gonna need to cheat, hah! Bookmark this thing yo!

And as you probably noticed, we didn’t include the triangle formations (symmetrical, ascending, and descending) in this cheat sheet.

Confusing I know, but that’s where practice and experience come in!

As we mentioned, it’s tough to tell where the forex market will breakout or reverse.

So what’s important is that you prepare well and have your entry/exit orders ready so that you can be part of the action either way!

Working in finance: 5 forex careers

The forex markets can be exciting and lucrative for trading if you thoroughly understand how to buy and sell currencies. If you're drawn to this area, you might even want to make it your career.

Key takeaways

The foreign exchange (forex) market is the world's largest asset marketplace by trading volume and liquidity, open 24/7 and crucial for global finance and commerce.

Being a forex trader can be a risky venture and requires a high degree of skill, discipline, and training.

For non-traders, you can still get involved in the forex markets through other channels.

Market research; account management; regulation; and software development are just a few forex careers that do not directly involve trading.

Forex markets

Forex markets are open 24 hours a day, five total days a week, which means jobs are fast-paced, involve long days and strange work hours. they require knowledge of and compliance with laws and regulations governing financial accounts and transactions. Some jobs require candidates to have passed one or more exams, such as the series 3, series7, series 34 or series 63 exams.

If you are eligible to work in a foreign country, a career in forex can bring the added excitement of living abroad. No matter where you work, knowing a foreign language, particularly german, french, arabic, russian, spanish, korean, mandarin, cantonese, portuguese or japanese, is helpful and might be required for some positions.

This article will provide an overview of five major career areas in forex, but please keep in mind that specific positions tend to have different names at different companies.

1. Forex market analyst/currency researcher/currency strategist

A forex market analyst, also called a currency researcher or currency strategist, works for a forex brokerage and performs research and analysis in order to write daily market commentary about the forex market and the economic and political issues that affect currency values. These professionals use technical, fundamental and quantitative analysis to inform their opinions and must be able to produce high-quality content very quickly to keep up with the fast pace of the forex market. Both individual and institutional traders use this news and analysis to inform their trading decisions.

An analyst might also provide educational seminars and webinars to help clients and potential clients get more comfortable with forex trading. Analysts also try to establish a media presence in order to become a trusted source of forex information and promote their employers. Thus, there is a large marketing component to being a forex analyst.

An analyst should have a bachelor's degree in economics, finance or a similar area. They may also be expected to have at least one year of experience working in the financial markets as a trader and/or analyst and be an active forex trader. Communication and presentation skills are desirable in any job, but are particularly important for an analyst. Analysts should also be well-versed in economics, international finance and international politics.

2. Forex account manager/professional trader/institutional trader

If you have been consistently successful trading forex on your own, you may have what it takes to become a professional forex trader. Currency mutual funds and hedge funds that deal in forex trading need account managers and professional forex traders to make buy and sell decisions. Institutional investors such as banks, multinational corporations and central banks that need to hedge against foreign currency value fluctuations also hire forex traders. Some account managers even manage individual accounts, making trade decisions and executing trades based on their clients' goals and risk tolerance.

It's important to note that these positions have very high stakes. Account managers are responsible for large amounts of money, and their professional reputations and those of their employers are reliant on how well they handle those funds. They are expected to meet profit targets while working with an appropriate level of risk. These jobs may require experience with specific trading platforms, work experience in finance and a bachelor's degree in finance, economics or business. Institutional traders may not only need to be effective traders in forex, but also commodities, options, derivatives and other financial instruments.

3. Forex industry regulator

Regulators attempt to prevent fraud in the forex industry and can hold multiple roles. Regulatory bodies hire many different types of professionals and have a presence in numerous countries. They also operate in both the public and private sectors. The commodity futures trading commission (CFTC) is the government forex regulator in the U.S., while the national futures association (NFA) sets regulation standards, and screens forex dealer members from the private sector.

The CFTC hires attorneys, auditors, economists, futures trading specialists/investigators and management professionals. Auditors ensure compliance with CFTC regulations and must have at least a bachelor's degree in accounting, though a master's and certified public accountant (CPA) designation are preferred. Economists analyze the economic impacts of CFTC rules and must have at least a bachelor's degree in economics. Futures trading specialists/investigators perform oversight and investigate alleged fraud, market manipulation and trade practice violations, and are subject to work experience and educational requirements that vary by position.

CFTC jobs are located in washington, DC, chicago, kansas city and new york and require U.S. Citizenship and a background check. The CFTC also provides consumer education and fraud alerts to the public. Since the CFTC oversees the entire commodity futures and options markets in the U.S., it is necessary to have an understanding of not just forex, but all aspects of these markets.

The NFA is similar to the CFTC and also oversees the broader futures and commodities markets, but instead of being a government agency, it is a private-sector self-regulatory organization authorized by congress. its mission is to maintain market integrity, fight fraud and abuse and resolve disputes through arbitration. It also protects and educates investors and enables them to research brokers (including forex brokers) online. Most NFA jobs are located in new york, but some are in chicago.

Internationally, a regulator could work for any of the following agencies:

Financial conduct authority (FSA) in the U.K.

Financial services agency (FSA) in japan

Securities and futures commission (SFC) in hong kong

Australian securities and investments commission (ASIC) in australia

4. Forex exchange operations, trade audit associate and exchange operations manager

Forex brokerages need individuals to service accounts, and they offer a number of positions that are basically high-level customer service positions requiring FX knowledge. These positions can lead to more advanced forex jobs.

The job of an exchange operations associate includes processing new customer accounts; verifying customer identities as required by federal regulations; processing customer withdrawals, transfers and deposits; and providing customer service. The job usually requires a bachelor's degree in finance, accounting or business, problem-solving and analytical skills and an understanding of financial markets and instruments, especially forex. It may also require previous brokerage experience.

A related position is a trade audit associate, which involves working with customers to resolve trade-related disputes. Trade audit associates must be good with people, able to work quickly and think on their feet to solve problems. Unsurprisingly, they must also thoroughly understand forex trading and the company's trading platform in order to help customers.

An exchange operations manager has more experience and greater responsibilities than an exchange operations associate. These professionals execute, fund, settle and reconcile forex transactions. The job may require familiarity with forex-related software, such as the widely-used society for worldwide interbank financial telecommunication (SWIFT) system.

5. Forex software developer

Software developers work for brokerages to create proprietary trading platforms that allow users to access currency pricing data, use charting and indicators to analyze potential trades and trade forex online. Qualifications include a bachelor's in computer science, computer engineering or a similar degree; operating system knowledge such as UNIX, linux and/or solaris; knowledge of programming languages such as javascript, perl, SQL, python, and/or ruby; and an understanding in many other technical areas, including back-end frameworks, front-end frameworks, databases and web servers.

Software developers may not be required to have financial, trading or forex knowledge to work for a forex brokerage, but knowledge in this area will be a major advantage. If you have forex trading experience, chances are you'll have a much better idea of what customers are looking for in forex software. Software quality is a major differentiator for forex brokerages and a key to the company's success.

For instance, a brokerage faces serious problems if its clients can't execute trades when they want or trades are not executed on time because the software doesn't work properly. A brokerage also needs to attract customers with unique software features and practice trade platforms.

Other positions in forex that require computer-driven experience include user-experience designers, web developers, network and systems administrators and support technicians.

Additional job options in forex

In addition to the specialized, highly technical careers described above, forex companies need to fill typical human resources and accounting positions. If you're interested in a career in forex, but don't yet have the required background or experience for a technical position, consider getting your feet wet in a general business position and for college undergraduates, many forex companies offer internships.

How to make money trading forex

How does forex trading work?

In the forex market, you buy or sell currencies.

Placing a trade in the foreign exchange market is simple. The mechanics of a trade are very similar to those found in other financial markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

And if you don’t, you’ll still be able to pick it up….As long as you finish school of pipsology, our forex trading course!

The objective of forex trading is to exchange one currency for another in the expectation that the price will change.

More specifically, that the currency you bought will increase in value compared to the one you sold.

Trader’s action	EUR	USD
you purchase 10,000 euros at the EUR/USD exchange rate of 1.1800	+10,000	-11,800*
two weeks later, you exchange your 10,000 euros back into U.S. Dollar at the exchange rate of 1.2500	-10,000	+12,500**
you earn a profit of $700	0	+700

*EUR 10,000 x 1.18 = US $11,800
** EUR 10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency.

For example, the USD/CHF exchange rate indicates how many U.S. Dollars can purchase one swiss franc, or how many swiss francs you need to buy one U.S. Dollar.

How to read a forex quote

Currencies are always quoted in pairs, such as GBP/USD or USD/JPY.

The reason they are quoted in pairs is that, in every foreign exchange transaction, you are simultaneously buying one currency and selling another.

How do you know which currency you are buying and which you are selling?

Excellent question! This is where the concepts of base and quote currencies come in…

Base and quote currency

Whenever you have an open position in forex trading, you are exchanging one currency for another.

Currencies are quoted in relation to other currencies.

Here is an example of a foreign exchange rate for the british pound versus the U.S. Dollar:

The first listed currency to the left of the slash (“/”) is known as the base currency (in this example, the british pound).

The base currency is the reference element for the exchange rate of the currency pair. It always has a value of one.

The second listed currency on the right is called the counter or quote currency (in this example, the U.S. Dollar).

In the example above, you have to pay 1.21228 U.S. Dollars to buy 1 british pound.

When selling, the exchange rate tells you how many units of the quote currency you get for selling ONE unit of the base currency.

In the example above, you will receive 1.21228 U.S. Dollars when you sell 1 british pound.

The base currency represents how much of the quote currency is needed for you to get one unit of the base currency

If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.

In caveman talk, “buy EUR, sell USD.”

You would buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency.

You would sell the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

With so many currency pairs to trade, how do forex brokers know which currency to list as the base currency and the quote currency?

Fortunately, the way that currency pairs are quoted in the forex market is standardized.

You may have noticed that currencies quoted as a currency pair are usually separated with a slash (“/”) character.

Just know that this is a matter of preference and the slash may be omitted or replaced by a period, a dash, or nothing at all.

For example, some traders may type “EUR/USD” as “EUR-USD” or just “EURUSD”. They all mean the same thang.

“long” and “short”

First, you should determine whether you want to buy or sell.

If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price.

In trader talk, this is called “going long” or taking a “long position.” just remember: long = buy.

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price.

This is called “going short” or taking a “short position”.

Just remember: short = sell.

Flat or square

If you have no open position, then you are said to be “flat” or “square”.

Closing a position is also called “squaring up“.

The bid, ask and spread

All forex quotes are quoted with two prices: the bid and ask.

In general, the bid is lower than the ask price.

What is “bid”?

The bid is the price at which your broker is willing to buy the base currency in exchange for the quote currency.

This means the bid is the best available price at which you (the trader) can sell to the market.

If you want to sell something, the broker will buy it from you at the bid price.

What is “ask”?

The ask is the price at which your broker will sell the base currency in exchange for the quote currency.

This means the ask price is the best available price at which you can buy from the market.

Another word for ask is the offer price.

If you want to buy something, the broker will sell (or offer) it to you at the ask price.

What is “spread”?

The difference between the bid and the ask price is known as the SPREAD.

On the EUR/USD quote above, the bid price is 1.34568 and the ask price is 1.34588. Look at how this broker makes it so easy for you to trade away your money.

If you want to sell EUR, you click “sell” and you will sell euros at 1.34568.

If you want to buy EUR, you click “buy” and you will buy euros at 1.34588.

Here’s an illustration that puts together everything we’ve covered in this lesson:

The ultimate indicator cheat sheet for your trading [infographic]

Indicators are very famous tools and used by millions of traders. However, often traders don’t really know what their indicators are doing or how to use them.В over the past articles, we covered and explained many different indicators in depth and I am going to link them up here as well. But, to summarize all the information and make it easily accessible for you, we put together this indicator trading cheat sheet that exactly tells you what different indicators do, what their main goals are and under which conditions to use them.

And if you want to know more about individual indicators, you can check out our in-depth articles:

Right-click and use ‘save target as’ to save the infographic to your computerв

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With over 20+ years of combined trading experience, rolf schlotmann and moritz czubatisnki have gathered substantial experience in the trading world.

The main expertise lies in forex (currency) trading. Rolf and moritz share their trading strategies across all timeframes.

Well over 1000 people have gone through the trading education offered at traderciety.

Learn to professionally day- or swing-trade the financial markets.

Risk disclaimer

The content provided by tradeciety does not include financial advice, guidance or recommendations to take, or not to take, any trades, investments or decisions in relation to any matter. The content provided is impersonal and not adapted to any specific client, trader, or business. Therefore tradeciety recommends that you seek professional, financial advice before making any decisions. Results are not guaranteed and may vary from person to person. There are inherent risks involved with trading, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is solely at your own risk, you assume full responsibility. || full risk disclaimer

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How to make money trading forex

How does forex trading work?

In the forex market, you buy or sell currencies.

And if you don’t, you’ll still be able to pick it up….As long as you finish school of pipsology, our forex trading course!

The objective of forex trading is to exchange one currency for another in the expectation that the price will change.

More specifically, that the currency you bought will increase in value compared to the one you sold.

Trader’s action	EUR	USD
you purchase 10,000 euros at the EUR/USD exchange rate of 1.1800	+10,000	-11,800*
two weeks later, you exchange your 10,000 euros back into U.S. Dollar at the exchange rate of 1.2500	-10,000	+12,500**
you earn a profit of $700	0	+700