Percentage in Point |
| Posted: 27 Feb 2011 07:52 AM PST Once start trading at the Forex market, one have to become used to with the huge amount of information. It is difficult for a new trader to learn the jargon s. Few terms used in currency exchange are easy to understand, whereas others are not. Some of the most common Forex trading terms are:
Bid The price offered to buyers of foreign currency or an instrument to purchase. Entry Orders This is principally an advance order. Exchange takes place when the rate of a currency is reached at that pre-decided level. Long Position When the trend buying and selling long term securities is prevailing in market then it is called long position. Lot The unit used for measuring the amount of a deal. Normally, a group of goods or services that are used in a transaction. For exchange-traded securities, a lot may stand for the least quantity of that security that may be traded. The value of the deal always corresponds to an integer number of lots.
Margin The least amount of money needed to trade, for example the margin may be 10 lot for $100 and therefore you would need $3000 in your account to trade 3 lots. Market Order It is an order to acquire or sell stocks or commodities at the current market price. It is executed while buying a currency. Offer The price at which a seller is agreed to sell an instrument. The best offer is the lowest available price. When one party shows interest to buy or sell an instrument from another party, the offered price is often the high. The buyer pays to purchase an instrument at the lowest price that the seller accepts. Pip
The least price change that an exchange rate can make. Mostly the currency pairs are priced to four decimal places. The minimum change is that the last decimal point. For most pairs this is the equivalent of 1/100 of one percent. Spot Deal A foreign exchange deals in which there is a mutual contract between parties exchanging a certain amount of a currency for getting a certain amount of another currency from a 2nd counter party. It is based on pre defined exchange rate, within two business days of the deal date. Apart from for the Canadian dollar, where the spot delivery is executed within one business day. Stop-Loss Order This function is offered by some brokers who aim to reduce risk. The maximum and minimum amount of profit or loss can be decided to execute trade at. This approach allows investors to decide their loss limit earlier which helps to prevent emotional decision-making. Spread The difference between the bid and offer rates of a security or an asset. Short Position When the buying and selling of short term securities is prevailing in market then it is called short position. Trend The direction in which the market is currently moving on is called trend.
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