Foreign Exchange markets (FX) are the most liquid financial markets that provide traders to buy and sell currencies depending on their relative value amongst each other.
The major currencies are USD, EUR, GDP, AUD, CAD, CHF and JPY. The first quoted currency indicates the base currency, while the second quote is the term currency. Traders need to use the base currency to buy and sell as the profit and loss is calculated using the term currency.
When a trader is a net buyer in the FX market the position is called “long”, while when the trader is a net seller the position is called “short”. To close out a position, you need to take the opposite position of your original one.
For example, if you buy EUR/USD at a rate of 1.3250, that means you bought 1EUR (long position) and sold 1.3250 USD (short position) expecting Euro to gain against the US dollar. To close the position, you need to sell the same amount of EUR/USD.
The difference between the bid price and the ask price is called the spread. Yapi Kredi’s bid and ask prices reflect the prices you can sell and buy respectively.
Due to its highly-liquid nature, FX transactions have the lowest risk of manipulation. The market is open at all times during business days which allows traders to trade globally. Traders may profit by moving in both directions as they can leave orders to limit losses or maximize profit even when they are away from their screens.
PRICING
Yapi Kredi Invest recieves liquidity from the leading banks in the world. Since Yapi Kredi Invest is a market maker, the broker may also show its own quotation. The leveraged FX platform aggregates all the quotations received from the liquidty providers and sorts them by best bid and offer to the client’s trading platform. Clients trade according to the prices shown on the platform.
In case where the broker shows its own quotation, there could be a conflict of interest as the client loss could result in profit for the broker or vice versa.