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When trading the forex you will come across jargon which is peculiar to the market. In this article I will explain what they mean so you are fully armed when FX trading.
Ask Rate – the actual rate at which usually an investo can purchase a foreign currency that is actually for sale.
Base Currency – the currency in which other currencies are quoted as a pair. Commonly the U.S. dollar.
Bid/Ask Spread – the variance bewteen the bid and offer value.
Commission – the charge which is demanded by a broker.
Contract – the normal unit of trading.
Cross Rate – the exchange price concerning any two currencies which are notof the country in which the foreign currency is quoted.
Day Trading – trades in which positions are opened and closed on the same day.
Depreciation – a drop in the worth of a currency.
Foreign Exhange, FX, or Forex – the simultaneous purchase or sale of one foreign money against the purchase or sale of another.
Fundamental Analysis – the evaluation of monetary and political.
Limit Order – a purchase which sets restrictions on the amount of earnings and losses it can make.
Liquidity – the capability of a market to accept large transactions without it affecting the stability of its rates.
Long Position – a position that increases in worth if market prices improve.
Margin Call – when further security is requested to assure overall performance in a position that has moved in opposition to the buyer.
Maturity – the date in which a financial instrument is expired or a purchase is settled.
Open position – a trade that has not yet been settled with an actual payment.
Overnight Trading – tradings in which positions continue to be available until the next day.
Pips/points – one unit of cost chang in the bid/ask cost of a foreign currency. It is the particular final digit in a rate: the fourth decimal point in an exchange rate.
Roll-Over – a procedure in which the settlement of an exchange is pushed towards a different date.
Short Positio – a position that improves in value if the market prices decrease.
Spread – the difference between the bid and the offer rates for a foreign currency pair.
Stop Loss Order – an order in which an open placement is automatically liquidated at a particular price.
Technical Analysis – an examination of historical marketplace trends in an effort to predict short term changes.
Make yourself familiar with all these forex words and phrases before trading to increase your understanding of the forex market.
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Miles Carmichael, Professional Forex Trader of 10 experience and success. Proprietary Trader. Happy to share my knowledge and experience to help other traders.
