When a high or low is made, often a sufficient amount of momentum will propel the price to an ever higher high or lower low. Rather than trying to pick a top or a bottom, which often ends in tears, a wise trader according to this adage should instead wait for the market to run out of steam and reverse before taking a position in a contrary direction to a prevailing trend. When a market has obviously picked a direction and has the conviction of a large number of traders and money propelling the move, either get on the train or step aside and let it pass.

This philosophy is especially relevant to swing traders who often seek to trade and profit from counter-trend corrections, as well as the prevailing trend. The mantra of technical analysts, the saying refers to the belief that news about any event related to the trading instrument — whether it is related to current events or supply and demand — will already be included in the price of a currency.

Buying the rumor means going long before a bullish news item ever makes it to the news wires for fundamental analysts to mull over. Trading activity then ensues based on this rumor indicating that an item of importance will soon be released. The trader wise to the rumor can take advantage of the release of this news by selling out their position once it becomes public. These sometimes rather colorful market sayings all warn traders to avoid relying solely on their valuation attempts when trading.

Nevertheless, lows often lead to lower lows and highs often lead to higher highs, especially in trending markets.

Here you can learn how to design your trading plan. This maxim recommends trading along with the market trend which consists of the predominant direction of the market in the currency pair of interest. Basically, the phrase is a statement to avoid going against the predominant directional trend, which could be compared to swimming against the current or going against the flow. This tends to give a trader an edge.

This saying refers to the slow and plodding nature with which markets often go up, whereas when prices decline, they tend to do it in a much faster and abrupt way.

While less of a factor in the forex market, this is especially true of stock markets. This saying refers to trading only with money you can afford to lose. Trading in the forex market can be extremely risky and the entire sum of money committed to the market could either explode and multiply or disappear in one sharp currency move. Refrain from believing anyone that tells you that forex trading is not risky or that profits are guaranteed.

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This saying is pretty much self-explanatory once you know the significance of the market animals it refers to. In general, it offers a warning to avoid allowing greed to predominate in your trading decisions. Many traders get greedy in taking profits, and instead of taking and locking in a reasonable profit, they will hold out for more money. This can have disastrous results for their account, sometimes even turning winning trades into losers. This maxim describes profitable trading in a nutshell and represents what every successful trader aspires to do.

Of course, the hidden joke behind this saying is that buying low and selling high is so much easier said than done. Nevertheless, some technical indicators like the Relative Strength Index can help traders determine when the market is high and when it is low, as can support and resistance levels.

Basically, all of the above sayings contain valuable advice and trading wisdom that can be useful for just about anyone involved or thinking about getting involved in trading forex or any other market. See our nice infographic for beginners on the forex market. Take our free learn forex trading course.

There are two parts to a forex quote , a bid and an ask. Here's another forex quote that helps make clear the meaning of these terms in the forex market:. Here the bid is 1. If you spelled this out, it would look like this:. Here the bid price is 1. Contrary to what you may think when you begin exploring the forex market, a bid price is not the price you'll bid when you want to buy a currency pair. Instead, the two terms are used from the perspective of the forex broker. From the broker's perspective, when you're the potential buyer, the broker will ask for a little more than what he might be willing to bid if you were selling.

In the given example, since you're interested in buying EUR, the base currency, you'll pay the ask , the broker's asking price, which is 3. If you were selling, you'd accept the broker's bid, which is 3. If you find these terms initially confusing, it helps to remember that the terms bid and ask are from the broker's perspective, not yours. When you're buying, you'll pay what the broker's asking for the currency; when you're selling, you'll need to accept what the broker's bidding.

The difference between the bid and the ask is called the spread.

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The spread is simply the broker's commission on the trade. One of the terms you'll often hear in forex contexts is the pip. A pip is a unit of measure, and it's the smallest unit of value in a forex currency quote.

So, in the example. The first number, 1. The spread is the difference of 5 pips. Trading Forex Trading.

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By Full Bio Follow Linkedin. Follow Twitter. John Russell has written about forex trading for The Balance. Read The Balance's editorial policies.