Knowing well about Forex iincludes the association of new words which may be foreign to a new trader. The meaning of some words used in Forex are different from the ordinary use of the words themselves. Moreover, a deeper knowledge about these technical terms used by the Forex market will be an aid in determining Forex trading strategies.
Ask: It is defined as the buying price of a certain currency.
Bid: It is defined as the selling price of a certain currency.
Currency Pair: The term which tells the currency being in position of the trade. . It‘s fixed mode is base currency/ cross currency.
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 defined as the initial money being put aside as a fund to process a certain trade; it is in the form 100:1; 100 being the real trade and 1 as the initial fund.
Liquidity: It is defined as the sellers and buyers quantity in the market. Due to the 24 hour Forex market trading, it is quietly said that the market is enjoying a high liquidity.
Lot: It is defined as the bulk of currency that is position to be traded in the market; a standard lot carries a 100, 000 unit while the broken lot is called 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 is defined as the deductible money or the added money during a trade that extend 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.
