What is the meaning of Base currency?
As we know in
foreign exchange market, we have currency
pair in which currencies are traded in pairs. The base currency is The first currency within the combine. In other words we can say that The base currency is that the currency against that exchange rates square measure usually quoted during a given country.
Ex: CHF/JPY,
the CHF is the base currency when we buy CHF we sell JPY at the same time.
we can divide trading in "Foreign Exchange Market into 2 main processes:
Buying Long
Our major
concern is the price increasing of Base currency.
Entry Rule is buying the base currency.
Exit Rule is selling the base currency.
If we want to enter buying process of USD/JPY, at first we should buy USD then we should sell JPY .If we want to get a profit we should sell USD by
buying JPY.
Selling Short
Our major
concern is the price increasing of Base currency.
Entry Rule is selling the base currency .
Exit Rule is to Buyback the base currency
If we want to enter selling process of Euro \ USD, at first we should sell Euro then we should buy USD .if we want to Get a profit we should buy Euro and exchange
it by USD .
