Basic terms used in the forex market

Basic terms used in the forex market

Forex is traded in amounts called blogger.com standard lot > has , units of the base currency, while a micro lot has 1, units. For example, if you buy 1 standard lot of EUR/USD at , you buy , Euros and you sell , US dollars. Similarly, when you sell 1 micro lot of EUR/USD at , you sell 1, Euros and you buy 1, Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades. ‘Forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange 1. Pip. Pip stands for “Percentage in Point”. A pip in the Forex market is a common measurement for how far the price has moved. Whilst most brokers these days go to the fifth decimal, a pip movement is the fourth decimal. For example; is one blogger.comted Reading Time: 4 mins

Forex Terminology, Definitions and Slang With Free PDF

The Forex market is a crazy place, full of terms that a lot of people have never heard before. While having some previous experience trading stocks or futures is helpful to a budding Forex trader, there are a few terms that can be misleading to someone with no prior experience.

The following is a short list of some extremely basic terms that no one trading Forex can stand to be ignorant of. Image credit: GStatic. Basic terms used in the forex market Forex or foreign exchange market is a group of traders conducting tens of trillions of dollars worth of trades 24 hours a day, six days a week.

When the Forex or FX market is in session, individuals, governments and major banks all over the world trade currency pairs with one another constantly. Image Credit: Flickr. Currency pairs are when two types of money are traded for one another.

One can trade nearly any kind of currency against nearly any other kind, provided someone in the Forex market has it available. For example, one can trade US dollars versus Japanese yen, or Euros versus Great British pounds. Since there is no unilateral standard for what a particular currency is worth, the market is in constant flux as currencies basic terms used in the forex market upward and downward against one another.

In most cases, there are seven major currencies being traded. These currencies include the ones mentioned above, as well as Australian and Canadian dollars and Mexican pesos. However, since there are over a dozen different currencies available in the Forex market, there are dozens of different currency pairs one can trade, basic terms used in the forex market. The spread is the difference between the bid or buying price for a currency and the ask or selling price for it. An individual trading currencies has to use a broker, and every broker attaches a spread to the currency they trade, which is where they make their profit.

When you trade currencies, you watch the numbers in your currency pair. If the currency you hold has a higher number than that of the currency you are about to trade for, you will make a profit. If the reverse is the case, you will take a loss. Naturally, making a profit is in your best interests. A pip is the smallest unit on the Forex market. In some cases, two currencies have four digits to the basic terms used in the forex market of the decimal point—the furthest right is the pip.

In others, most notably those involving Japanese yen, the pip is the second number from the decimal point, basic terms used in the forex market. One pip of basic terms used in the forex market between two currencies may represent only a tiny amount of money going into your retirement fund, but there is an ace in the hole: leverage. Image credit: Flickr. Unless you are watching Mr. Wizard, leverage refers to the use of credit or margins to trade currencies on the Forex market.

With leverage, an individual can make one dollar have as much power as fifty dollars. This leverage must be used carefully because it can lead to heavy losses, which we will discuss in the next section. Image credit: Geograph. Margins are more than just the edges of a piece of paper. Margins are also the credit many brokers will extend to traders, which allow them to trade large amounts of money without investing nearly as much.

However, there is a risk which comes with this power. Sometimes, the Forex market becomes as scared a place as any other market. Rather like during the Panic of in the stock market, trading comes to a near standstill and many large players lose confidence. This tends to initiate a margin call, which is when everyone who is trading on margins has to return all of the money they borrowed, basic terms used in the forex market.

This can be problematic if one owns currencies which have changed value against them. During a margin call, a trader is responsible for all of the money they have borrowed, which can subject them to losses far beyond the money they originally invested. Thus, it is extremely important to initiate a stop loss. A stop loss is your best friend.

Provided you set a stop loss properly, or set a trailing stop loss, you will only stand to lose a small amount of your investment, regardless of where the Forex market goes. A regular stop loss will stay at a particular valuation between currencies permanently, while a trailing stop loss will continue with your position no matter how high it may go. Once you have a decent profit, a trailing stop loss will protect your profit. Holding a long position in a currency means keeping it for an extended period, often for at least a week.

In the Forex world, a week can be a very long time. Occasionally traders will even keep positions for several months, and ride a long-duration trend in that position. However, shorting or short selling a currency is a bet against it going downward, basic terms used in the forex market. When a trader shorts a currency, they buy a currency trading against it.

The Forex market is a place where having a good command of a few basic terms is crucial to having any kind of success. Opinions vary widely on what constitutes a successful trading strategy, but without the above terms, the only terms you will get to know well are loss and tax deductions.

After taking a short course about forex. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.

I have a B. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile. IMHO, Very clear for understanding for all traders. Is there any opportunity for me to guest post on your basic terms used in the forex market too?

Before you click on a quote price whether you pick sell or buyyou see 3 prices in the platform…the quote price, basic terms used in the forex market, the bid and the ask prices. At least that is my understanding before you decide to trade. If my understanding is correct, then how come my trade were automatically stopped by the system at a bid price that was for a certain quote price that took place 6 hours after my trade?

It seems like an issue with the broker. Thanks Yohay! thanks anyway for your feedback. Latest Dogecoin Price Prediction: Looking To Start Climbing Back Up? Forex Broker News: Exiniti Launches FX Broker As Tech Provider Branches Out. Guest post by www. com Forex Image credit: GStatic The Forex or foreign exchange market is a group of traders conducting tens of trillions of dollars worth of trades 24 hours a day, six days a week.

Currency Pair Image Credit: Flickr Currency pairs are when two types of money are traded for one another. Spread Image credit: Shutterstock The spread is the difference between the bid or buying price for a currency and the ask or selling price for it.

Pip Image credit: Shutterstock A pip is the smallest unit on the Forex market. Leverage Image credit: Flickr Unless you are watching Mr. Margins Image credit: Geograph.

uk Margins are more than just the edges of a piece of paper. Stop Loss Image credit: Flickr A stop loss is your best friend. Long Versus Short Image credit: Flickr Holding a long position in a currency means keeping it for an extended period, often for at least a week. Closing it Up The Forex market is a place where having a good command of a few basic terms is crucial to having any kind of success. Content Resources: Investopedia. com Get the 5 most predictable currency pairs.

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TERMINOLOGIES USED IN FOREX TRADING//BASICS//10 important terms in FX trading/Beauty In FOREX EP3

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Forex Basic Terms

5/28/ · 7. Bear Market. This is a term used to describe the stock market when it is moving in a downwards trend. In other words, when the prices of stocks are falling. If a stock price falls deep and fast, it's considered very bearish. 8. Bull Market. The opposite of a bear market is a bull blogger.comted Reading Time: 8 mins In the forex market, the US dollar is normally considered the base currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British pound, the euro and the Australian dollar Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades. ‘Forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange