The Forex Trading Glossary Every Trader Needs To Go Through

Forex trading is something many individuals have benefitted from engaging in. This system has also made things transparent for investors who are involved in interbank dealing. It is a huge market that has been globalized and accommodates participants from every nook and corner of the world. Visit forex

Since trading currencies is a fairly risky proposition, you must understand the process and the terms associated with it thoroughly before getting into this space. When you do some research on the forex market, you also get a better idea about the kind of forex broker you should collaborate with.

Here is the forex trading glossary every trader needs to go through:

Arbitrage

Arbitrage refers to the process of countervailing prices across multiple markets by selling or purchasing a particular currency.

Ask

Ask, also referred to as ask price, is the price at which traders agree to buy a currency.

Asset

An asset is an item or entity that has some value. A currency, for example, is an asset.

Base Currency

Ina currency pair, the base currency is the first currency that gets listed. For instance, when a GBP/USD pairing is mentioned, you can consider GBP to be the base currency.

Bear Market

Bear market is a term that is used to denote the price of a currency, asset or security that is showing downward movement or declining. A lot of traders refer to the bear market simply as bear. Bearish is a term that traders use to describe the forex’s market state when it is declining.

Bid

Bid, also referred to as bid price, is the price at which a trader wishes to sell a specific currency.

Buy Limit Order

A buy limit order can be described as an order that is designed to propel a transaction forward at a particular price. Here, ‘limit’ is used to denote the price threshold.

Carry Trade

Carry trade refers to the situation when an investor borrows a certain amount of money at an interest rate that is lower than the market average. This is done so that one could buy assets that might offer higher interest rates.

Closed Position

When somebody is closing a position, it means they are ending a particular transaction and are willing to incur the profits or losses related to it.

Closing Market Rate

Also referred to as the closing price, the closing market rate signifies the final value that a particular currency is traded at a given point in time.

Currency Appreciation

When the value of a currency rises against another currency, it is referred to as currency appreciation.

Currency Futures

Currency futures can be defined as contracts that specify the price at which a particular currency can be bought or sold in the future. Future contracts work very well as hedging tools for traders.

Currency Pair

Currency pair is often described as the forex market’s nucleus. Currency pairs are traded with forex transactions. They exist in different forms like exotic, major and minor. GBP/USD, for instance, is said to be a major currency pair.

Daily Chart

Daily chart is a graph where a particular currency’s movements are broken down. It tracks the movements that have taken place within a span of a day.

Day Trade

Day trade refers to the forex trade that opens and closes on the same day.

Demo Account

A demo account, also referred to as a practice account, virtual currency account and dummy account, has been designed as a forex trading account where virtual funds are used. A demo account enables a trader to explore and understand the market without investing any real capital.

Depth of Market

Depth of Market refers to the overall volume of buying and selling orders that are placed for a particular currency. A wide range of prices is covered here.

Drawdown

When a currency price goes down, the difference between the highest peak and the emerging low is called the drawdown.

ECN Broker

An ECN broker is a specific type of broker that uses Electronic Communications Networks or ECNs to connect their clients with liquidity providers.

Exchange Rate

The exchange rate can be defined as the cost at which a particular currency can be traded for another.

Execution

Execution is the term that is used to describe a situation when a trade is initiated and executed properly.

Exposure

Exposure is the amount that you invest in a currency and the various market risks associated with it.

Fill Price

Fill price refers to the point when a particular order is completed. It also specifies the price it has been executed in.

Fill or Kill

When an investor has decided on a particular price for a forex transaction, they have the option of carrying out a fill or kill order. If the order does not get fulfilled at this price, it can be terminated.

Floating Exchange Rate

Floating exchange rate is an exchange rate that is not fixed at the moment. It can fluctuate depending on the demand and supply of a particular currency.

Forex Chart

A forex chart, just like a daily chart, happens to be a digital chart that brings price movements and several other important points pertaining to a currency to the foreground. Forex charts could extend up to anywhere ranging from a couple of days to several years.

Forex Scalping

Forex scalping is a strategy that is based on a very definitive concept. It states that when you open and close a trade in a short span of time, you stand to benefit more than observing large price movements.

Forex Signal System

A forex signal system is a forex service where forex signals are conveyed to subscribers associated with a particular market activity. The signal can pave the way for the execution of a trade either manually or automatically.

Forex Spot Rate

The forex spot rate is used to figure out the exchange rate at which a particular currency can be sold or bought.

Forex Trading Robot

A forex trading robot is software that functions as a guide for traders. It is automated software and helps tremendously in figuring out at what time one should sell or buy a currency pair.

Fundamental Analysis

Fundamental analysis is something every trader needs to be aware of. It refers to the process of gauging the impact major economic and political events will have on the market. Traders carry out this analysis to forecast the direction or movement of the market in the future. Know more https://multibankfx.com/latam/platforms/download-center