A currency pair is quoted with two prices.
One is the bid price and the other is the ask price which is higher than the bid price.
Bid is the price at which the broker will buy the base currency in exchange for the quote currency. This is the best available price in which a retailer can sell in the market.
while on the other hand,
Ask is the price where the broker will sell the base currency in exchange for the quote currency. This is the best available price in which a retailer can buy from the market.
The difference in prices between ask and price is called spread.
THIS IS WHERE YOUR BROKER MAKE MONEY. THEY EARN COMMISSION FROM THE SPREAD. (Consider spread as the transaction fee between the buyer and the seller)
Forex is the largest financial market in the world, this is why trading Forex involves a large amount of money. The reason why we trade in Volume or Lots, also known as the number of currency we buy or sell.
1 standard Lot is 100000 units, 1 mini lot is 10,000 units while 1 micro lot is 1000 units of currency.
Here's an example of quotes provided by a Broker which shows all the terminology that we've tackled.
Forex is the largest Financial market that exists today, the reason why every trader should have enough capital to start trading. How will you start trading if you only have a small capital? Here's what you're going to do!