Forex Spread Definition

The spread represent the difference between the bid and the ask of two currencies we are working with. It is strictly connected to the Forex as the brokers use the spread to work and make money during the trade. The spread is not very different from the real or actual price: for example, if a price is 1000 and you buy for 1001 and sell for 999 you are always close to the real price, but you have a difference of two (that can be euros, or dollars, or puond or what else) that represent the spread. So, in both case, if you buy or if you sell you also have to consider the spread.There are some more parametres connected to the spread, for example the Pips, the Percentage in Points, that can change a little, not the meaning of the spread, but its way to work with it. More info under

Consumer Confidence Definition

Investors need information that will guide them in making economic decision. This information is usually available at any particular time of the year, therefore any trader who is looking forward to make important economic decision should rely on it to be in a position to make viable conclusions. One of the most important parameter is economic indicator. Economic indicators are markers which provide proper guidance to the investors on the underlying data. The information is crucial for any economic decision that the traders make. The indicators usually describe how the country economy is performing and the impact this has on the national currency.

Public policy dictates that the stakeholders should be kept informed on the changes that are taking place in their country or entity. If it is private sector, the shareholders, employees and other interested parties should be periodically provided with financial information which clearly shows where the company stands as far as its performance is concerned. The same case applies to the government; it has a role to inform its citizens on the performance of the economy. This entails the release of economic data on a regular basis. Governments usually adhere to given schedules, for example some economies give quarterly reports where the economic indicators are released for public consumption. Traders in Forex market need to keep watch of these indicators to be in a position to make sound decisions.

In and around time when the Forex economic indicators are released, the trading volume either decreases or increases. The change of trading volume in a Forex market is usually determined by the type of economic indicators which are released. If the indicators point out to a bright future traders will react positively through increasing their activities around a currency ,on the other hand if the released indicators paint a gloom picture as far as the current and future status of the economy is concerned, there will be panic in and around the market. People will rush to move away from the currency which are not performing well or withdraw from the market in anticipation of the worst performance in the future.

Traders may not be in a position to interpret some of the indicators especially if they do not have sound background around this area. There will be a need to consult an expert to give a clear picture on what they mean. This will greatly help them in making sound decision especially matters pertaining to buying or selling of a currency.

To use the data, one must know exactly when it is scheduled for release; this helps the trader to make a decision based on the information. An economic calendar is one of the tools which can help the trader to know when a given economic indicator is due for release. Having this kind of information before hand puts one at a competitive advantage since the trader will be in a position to tell how a currency will behave in relation to the released data. If for example you know that the employment data will be released on Friday and have been following the market, release of a promising report will move the market, as the traders start unwinding the short positions.

As a trader one should try to understand the basics, grasping the relationship between the report and economic performance and in general the currency movement in the market will help in making worthwhile economic decision.

How to stop the trading: the stop loss and the take profit orders.

Forex trading can be a mean to gain money, but also a mean to lose them. So, to avoid this to happen, it is important to know about the ‘stop loss’ order, that, as the name itself suggest, is a way to save from the collapse. When a trader realizes that the market is going in a different direction with respect of his investments, he can decide to retreat and save the money remained. To do so, he must order the stop loss, that freeze the gain and the losses of the currencies at the precise time of the order. Of course, as today everything work with the on-line platforms, to order a stop loss you only need the time of a click.

But a stop order can also be used in the so called ‘long position’ that is the moment in which the trader is gaining, and is gaining well. An investor can decide that he is satisfied of what he has earned so that he doesn’t want to risk no more. In this case, he can give the take profit order, to save his profits. So the investor, in this case, has made a wide choice: this is not easy, because very often those that gain with the Forex Trading has like Online Poker have difficulties in realize when they have to stop. There is always the possibility of gain more, but there is always, too, the possibility to lose everything. It is important to remember that the on-line trading is a great risk, but the market itself gave investors the possibility to get out from the trading with these two important orders.

Forex Leverage Definition

The leverage is the increase return on the investiment. This means that when we operate on a Forex, we are working on a leveraged product. Strictly connected to the leverage is the meaning of the risk management. In fact, in the Foreign exchange, you deposit a little percentage of the total value you want to trade and aspect the increase of the return (or better, of the potential return) of this deposit. The leverage allows both the profit and the loss of the Forex to be higher respect to the traditional trading.