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FX Trading Terminology
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FOREX TRADING TERMINOLOGY
- Ask price: The price at which a currency is offered for sale.
- Bid price: The price at which a currency is offered for purchase.
- Currency pair: A pair of currencies that are traded against each other. For example, the EUR/USD currency pair is the exchange rate between the euro and the US dollar.
- Forex market: The global marketplace where currencies are traded.
- Leverage: The ability to control a larger position with a smaller amount of capital.
- Margin: The amount of money that is required to open a forex trade.
- Pip: The smallest unit of price movement in a currency pair.
- Spread: The difference between the bid price and the ask price.
- Scalping: A trading strategy that involves placing a large number of small trades in a short period of time in order to profit from small price movements.
- Technical analysis: The analysis of historical price data to identify patterns that can be used to predict future price movements.
- Trend: A general direction in which the price of a currency is moving.
- Fundamental analysis: The analysis of economic data and news to identify factors that may affect the value of currencies.
- Stop-loss: An order that automatically closes a trade if the price of a currency pair moves against you by a certain amount.
- Take-profit: An order that automatically closes a trade if the price of a currency pair moves in your favor by a certain amount.
- Trailing stop: A stop-loss order that moves with the price of a currency pair, so that your losses are limited even if the price moves against you.
- Hedging: A trading strategy that involves taking offsetting positions in different currencies in order to reduce risk.
- Diversification: The practice of investing in a variety of different currencies in order to reduce risk.
- Margin call: A notification from your broker that you need to add more margin to your account in order to maintain your open positions.
- Margin requirement: The amount of money that is required to maintain an open position in forex trading.
- Swap: The interest that is paid or received when you hold a currency pair overnight.
- Swap points: The number of pips that are paid or received when you hold a currency pair overnight.
- Volatility: The degree of fluctuation in the price of a currency pair.
- Liquidity: The ease with which a currency pair can be bought or sold.
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