Terminologies in forex trading

Posted: datha Date of post: 07.06.2017

The Forex market comes with its very own set of terms and jargon. The currency exchange rate between two currencies, both of which are not the official currencies of the country in which the exchange rate quote is given in. This phrase is also sometimes used to refer to currency quotes which do not involve the U. For example, if an exchange rate between the British pound and the Japanese yen was quoted in an American newspaper, this would be considered a cross rate in this context, because neither the pound nor the yen is the standard currency of the U.

However, if the exchange rate between the pound and the U.

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The value of one currency expressed in terms of another. The smallest increment of price movement a currency can make.

Also called as point or points. Leverage is the ability to gear your account into a position greater than your total account margin. Increasing your leverage magnifies both gains and losses. To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account.

terminologies in forex trading

The deposit required to open or maintain a position. Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions.

This allows a trader to leverage his account by up to times or a leverage ratio of Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The difference between the sell quote and the buy quote or the bid and ask price.

terminologies in forex trading

In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread. The Major Forex Pairs and Their Nicknames: Understanding Forex Currency Pair Quotes: You will need to understand how to properly read a currency pair quotes before you start trading them. The exchange free stock market index fund vanguard of two currencies is quoted in a pair, such as the EURUSD or the USDJPY.

The reason for this is because in any foreign exchange transaction you are simultaneously terminologies in forex trading one currency and selling another. If you were to buy the EURUSD and the euro strengthened against the dollar, you would then be in a profitable trade.

In other words, in the example above, you have to pay 1. In other words, in the example above, you will receive 1. An easy way to think about it is like this: So, whether you buy or sell a currency pair, it is always based upon the first currency in the pair; the base currency.

The basic terminologies in forex trading of Forex trading is to buy a currency pair if you think its base currency will appreciate increase in value relative to the quote currency. If you think the base currency will depreciate lose value relative to the quote currency you would sell the pair. Bid and Ask price. The bid is the price at which the market or your broker will buy a specific currency pair from you.

Thus, at the bid price, a trader can sell the base currency to their broker. The ask price is the price at which the market or your broker will sell a specific currency pair to you.

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Thus, at the ask price you can buy the base currency from your broker. The spread of a currency pair varies between brokers and it is the difference between the bid and the ask asx trading day calendar. Top 10 Fund Manager What is PAMM Open Fund Manager Account Open an Investor Account Terms and Conditions Contact Us.

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Forex News Forex Trading Education Forex Market Wiki XE - Currency Rates. Forex market is a place to earn good profits and at the same time the trading includes high level of risks too. Only the investors who can afford the losses are advised to invest in the Forex trading. The Trader should be capable of withstanding the high degree of leverage which may hit the account heavily.

Forex market is a highly volatile market where assurance is impossible. The traders who invest should completely analyze the nook and corner of the market before investing as no one can take the responsibility for the losses they face. The brokers can only guide the traders. The brokers cannot take the responsibility for the losses. Authorized and regulated by the IFSC Belize. Home About Us Why Choose BlueMax Capital Regulation and License Trading Account Types Open Live Account Open Demo Account Deposit Fund Withdrawal Form Platform MT4 Desktop Platform Web Trader MT4 for Android MT4 for iPhone Multi Account Manager PAMM Partnership Introducing Broker Forex White Label Partnership Resources Market Research myBlueMax Guide BlueMax Blog General FAQ PAMM FAQ MaxWallet FAQ Forex Education Forex Chart Contact Us myBlueMax.

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