Forex Definitions
- CURRENCY PAIR: Forex trading is the purchase of one currency by selling other currency. Currencies are traded through broker as Pairs are known as Currency Pair. For Example, the pair of EURO & US Dollar is EUR/USD.The first currency of a currency pair is called the "base currency", and the second currency is called the "quote currency". The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.For Example, if the USD/EUR coin pair is cited as being USD/EUR = 1.5035 and you buy the pair, this implies that for each 1.5035 euros that you offer, you buy (get) US$1. In the event that you sold the coin pair, you would get 1.5 euros for each US$1 you offer. The opposite of the cash quote is EUR/USD, and the comparing value would be EUR/USD = 0.667, implying that US$0.667 would purchase 1 euro.
Read more Basic of Forex
- CROSS CURRENCY PAIR: Major currency pair are Dollar based for example, EUR/USD, AUD/USD, GBP/USD, JPY/USD etc. all these pair have a common currency USD. When none of the currency in a pair is USD then it is called Cross Currency Pair. Suppose, EUR/JPY.
- BID PRICE: The BID PRICE represents the maximum price that a buyer or buyers are willing to pay for a security. The ask price represents the minimum price that a seller or sellers are willing to receive security.
- ASK PRICE: The ASK PRICE speaks to the base value that a merchant or merchants are willing to get for the security.
- TRADE: A TRADE or exchange happens when the purchaser and merchant concede to a cost for the security.
- SPREAD: The distinction between the offer and asked costs, or the spread, is a key marker of the liquidity of the advantage. The littler the spread, the better the liquidity. When a currency moves from a value of 1.4511 to 1.4514, it moved 3 PIPs. When a pip has a value of $10, you have gained $30.
- LEVERAGE: Buying & Selling the of currency more than the amount you have by Borrowing a certain amount of the money needed to invest in Trade known as Leverage. In Forex, usually that money borrowed from a Broker.
- PIPs: PIP stands for "price interest point". A PIP stands for percentage in Point. PIP is the smallest price movement of a traded currency. It is referred as Point also.For most currencies a pip is 0.0001 or 1/100 of a cent.
- PIPETTEs: A pipette is 0.00001 of 1/1000 of a cent for most of the currencies.
- LOT: The insignificant traded amount for each currency transaction is known as LOT. For regular accounts one lot equals 100,000 units of the base currency. You can also open a mini account and trade in mini lot sizes that are 10,000 units of base currency.
- TIME FRAME: Time Frame specifically shows the maximum price hike & minimum price decrease during 5 mins, 15 mins, 30 mins, 1hour, 1 week or 1 year. Usually M1, M5, M15, M30, H1, H2, D1, W1 time frames are used usually in Meta Trader4.
- BROKER: The company which will provide you the facility to make currency transaction in FOREX market is a Broker. Instaforex, Liteforex, FXCM, GFC Markets, FXCS etc. are some Broker.
- DEMO ACCOUNT: Demo Account is an virtual account to practice Forex trading. It is same as a real account. But it has no real money, you will trade here with virtual fake money you cannot withdraw your profit from here or if you loose the money don't be afraid you do not loose your real money.
- REAL or LIVE ACCOUNT: A Live account is a real account where should one trade with his real money he/she will get real profit or loss which will increase or decrease his/her real amount of money deposited on that account.
- SCALPING: Small trades of few minutes are called as Scalping. These trades can be between 1-20 pips. If the Profit goes above 20 pips of a trade than it will not be Scalping it will be Normal trade.
