Forex Trading for Beginners
Knowing well about Forex iincludes the association of new words which may be foreign to a new 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: The term used to note the price of buying currencies.
Bid: The term used to note the price of selling currencies.
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: It means Futures Commission Merchant which denotes the role of the broker as the bridging person between the Forex market and the trader.
Leverage: It is the money being used as an initial trading fund to ensure the trade like in the 200: 1 leverage- the amount of money needed as a fund is USD 200 to initialize a trade of USD 20, 000.
Liquidity: The combination of sellers and buyers at a single timeframe trading 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 denotes of the size of the currency being traded in the market t the moment for example, 1 Standard Lot means USD 100, 000 while the set offs are mini lot.
PIP: It is also known as Price Interest percentage which tells of the smallest quantity of money that determines the amount of market 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. There are several system present for public consumption but the most used one is MetaTrader4 Platform because it is convenient to use and good for best trading strategies to be implemented.
These technical terms can prove to be very useful and helpful to any trader. With the use of these technical terms and implementing the best Forex trading strategies, a trader can have his utmost potential to succeed in the business.