Now you must have learnt much about Forex trading but still there is more that you to have learned too, if you are interested in Forex trading. Another very important decision in Forex trading is the decision to go for a venture. Fully understanding the principles of forex trading and trading philosophy, will guarantee the profit.
Concept
Trying to implement the concept of forex position trading in a trading environment will surely help you to earn huge profits from forex transactions. This concept can be explained in a way that in forex position trading, by long position is meant a situation in which one buys or purchases a currency pair at a certain and later he hopes to sell it at higher price. This situation is also referred as buy low and sell high. Through this technique trader is benefited from increase in price.
Base Currency
Actually in forex trading position, a trader defines his/her position as an expression of the first currency of the traded pair. Thus the first the first currency in a pair is known as base currency. Therefore on every exchange a trader has a long position on one currency and a short position on the other currency.
Counter Currency or Second Currency
The second currency is also known as counter currency, is the second currency in the pair. So, whenever the trader buys the currency he/she takes a long position on a pair and if he/she sells the base currency they shorts the pair.
An example is quoted here to full understand the process, if the current rate for the USD/JPY pair in forex position trading is 122.93, which means it takes 122.93 Yen to exchange for 1 Dollar and if the trader buys the Dollar while selling Yen, he is buying or longing the USD/JPY pair.
