2. Basic Foreign Exchange Trading Mechanics

  1. James Chen

Published Online: 9 MAR 2012

DOI: 10.1002/9781118386040.ch2

Essentials of Foreign Exchange Trading

Essentials of Foreign Exchange Trading

How to Cite

Chen, J. (2009) Basic Foreign Exchange Trading Mechanics, in Essentials of Foreign Exchange Trading, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118386040.ch2

Publication History

  1. Published Online: 9 MAR 2012
  2. Published Print: 23 FEB 2009

ISBN Information

Print ISBN: 9780470390863

Online ISBN: 9781118386040



  • foreign exchange trading;
  • currency pair;
  • selling short;
  • margin and leverage;
  • currency trading


This chapter contains sections titled:

  • Anatomy of a Currency Pair

  • Going Long and Selling Short

  • Market Orders—On the Spot

  • Entry Orders—Waiting until the Price Is Right

  • Stopping Losses with Stop Losses and Trailing Stops

  • Profit Limits—When You're in the Money

  • Exit with Caution

  • Trade Size—Lots and Lots of Lots

  • Leveraging Margin and Leverage

  • Margin Call—Insufficient Funds

  • Pips—The Currency of Currency Trading

  • Spreading the Wealth—Spreads or Commissions?

  • Interest—Giving and Receiving

  • Hedging—Two Sides of the Same Coin

  • Chapter Summary