FOREX Vocabulary

FOREX Vocabulary

As with any training, you have the opportunity to expand your vocabulary. As a beginner, you should know what the following terms are all about, before you start trading. You've probably read most of the terms before, however, a small summary never hurts.

Majors
The eight most traded currencies (EUR, USD, JPY, GBP, CHF, CAD, NZD and AUD) are used as the main currencies (Major) denoted. Don't bother with others (Minor) Currencies, they are only for professionals. Especially at the beginning you should pay attention to the five most liquid and interesting (EUR, USD, JPY, GBP and CHF) judge.

Base currency
The base currency is the first currency in each currency pair. It shows how much the base currency is worth compared to the second currency. Example: the exchange rate is USD /CHF 1,6350, then a US dollar is worth as much as 1,6350 Swiss franc. In FOREX, in most cases, the US dollar is the base currency of a rate, what does the rate mean indicates how much you get from a particular currency for one US dollar. Exceptions are British Pounds, Euros and Australian and New Zealand dollars, here the US dollar is the counter currency.

Counter currency (Course, or quota currency)
The counter currency is the second currency of a currency pair. She also likes to be called Pip- Currency may refer to:, since any unrealized gain or loss is expressed in that currency.

Pip
A pip is the smallest unit of the price of a currency. Almost all currency pairs are valued by a five-digit number, where in most cases the comma is immediately after the first number (Example: EUR/USD = 1,2538). A pip is the smallest possible change in price, so 0.0001.

Bid Price
The bid is the price at which the market buys a currency pair. For you as a dealer, this means, the bid is the price at which you sell. A course is always announced by two numbers, the Bid and the Ask. Beispiel GBP/USD = 1,8812/1.8815. The bid is always on the left side and always lower than the Ask. In this example, you would use a British pound for 1.8812 Sell US Dollars.

Ask Pricing
The Ask is the price at which the market buys a currency pair. So the price at which you buy the base currency. The Ask price or also called the offer price, is always on the right side and is larger than the bid.

Spread
The difference between bid and ask is called spread. The spread is the share your broker gets for their services. In online trading, these are usually 2 or 3 Pips.

Margin
With each trade, part of the investment is set aside by the broker as collateral. Should the price develop against your expectations, you can be sure that you will never lose more than the first bet. The amount of this security amount may vary depending on the broker and risk level.

Leverage (Lever)
Leverage makes it possible to control large sums of money with little capital. Ratios of up to 1:400. So it is possible with only 25 US Dollar 10.000 Move US dollars in the market. High leverage increases your chances of big wins, however, your risk also increases.

Margin Call
Your broker ensures that you can never lose more than your first bet. Should the price develop badly, open positions are closed, so that no further losses can occur. This automatic security measure in conjunction with a notification to you, is referred to as “Margin Call” denoted.