Terms Used In Forex
Technical words in Forex market must be the new lexicon for any trader. These terms which have impact in the Forex market are also technical that knowing their implication to Forex is different in context. Moreover, a deeper knowledge about these technical terms used by the Forex market will be an aid in determining Forex trading strategies.
Ask: It is defined as the buying price of a certain currency.
Bid: It is defined as the selling price of a certain currency.
Currency Pair: The term which tells the currency being in position of the trade. . It comes in base currency/ cross currency mode; for instance, EUR/USD
FCM: or the Futures Commission Merchant is defined as the role of the broker to meddle between trades and the market.
Leverage: It is defined as the initial money being put aside as a fund to process a certain trade; it is in the form 100:1; 100 being the real trade and 1 as the initial fund.
Liquidity: It is defined as the sellers and buyers quantity in the market. The liquidity in today’s market is high because of the 24 hour Forex market activity being played by the traders.
Lot: It is defined as the bulk of currency that is position to be traded in the market; a standard lot carries a 100, 000 unit while the broken lot is called mini lot.
PIP: Price Interest Percentage. It is the smallest amount of money denomination from which the market may change.
Swap: It tells of the amount to be deducted or to be added to the traders account if he holds long on a certain currency bid until 2:00 EST.
Trading Platform: It is the kind of computer generated trading system used by trader and broker to maximize and provide an easy way to access the market. The most common platform is the MetaTrade4Platform because of its simplicity and easy usage but many other platform can be used by traders.
Knowing these technical terms can be of great advantage to anyone who wants to enter the world of Forex trading. By familiarizing one’s self with these terms together with the best Forex trading strategies, a trader will surely succeed.
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