Some important terms being used in FOREX trading are precisely defined below:

Ask Price:

Sometimes also known as Offer Price. It is the market rate for traders to purchase currencies. These are displayed on the extreme right side of a quote like EUR/USD 1.8899/ 78 which means that one euro can be purchased for 1.1965 USD.

Bar Chart:

A variety of chart which is used in Technical analysis. Every time partition on the chart is viewed as a vertical bar which means the following information: – the extreme top bar is the maximum rate, the below bar is the lowest rate, the horizontal bar displays the opening price and horizontal line on the right is the closing rate.

Base Currency:

It is the very first currency in a pair and the quote demonstrates how much of the base currency prices in the quote of other currency. Like in the quote – USD/JPY 122.90 – USD is the base currency worth 1 USD being rated as 122.90 Yen.

Bid Price:

It is the rate a trader can sale out currencies. The Bide Price is present on the left side of a quote like EUR/USD 1.1965 / 67 means that one Euro can be sold out for 1.1965 USD.

Bid/ Ask Spread:

It is the difference in bid price and the asked price in any currency notification. The spread shows the brokers charges and change from broker to broker.

Broker:

The medium in purchaser and seller. Many Forex brokers are attached with huge financial institutions and gain money by fixing a spread between bids and ask prices.

Candlestick Chart:

A variety of chart used in technical analysis. Every time partition on the chart is marked on the candlestick a red or green vertical bar with extensions above and below the candlestick body. The extreme of the extension demonstrates the highest rate for the chart partitioned and the bottom of the way shows the minimum rate. Red candlesticks shows a minimum winding rate than opening rate and green candlesticks shows the price increasing.

Cross Currency:

A currency pair that originally does not consists of US dollars like EUR/GBP.

Currency Pair:

Two of the currencies involved in a Forex transaction like EUR/USD.

Economic Indicator:

An assumption based report given by government or academic schools pointing economic situations with in a country.

First In First Out (FIFO):

It explains the orders opened are convertible. The first orders to be convertible are the first which were opened.

Foreign Exchange (FOREX, FX):

Buying a currency and selling the other.

Fundamental Analysis:

Political and economic conditions that can affect currency prices are visualised.

Leverage or Margin:

The ratio of the value of a transaction to the needed deposit. A common margin for FOREX trading is 100:1 and you can exchange currency worth 100 times the amount of your deposit.

Limit Order:

An order to buy or sell when the prices reach to a specified level.

Lot :

The size of a FOREX transaction. Standard lots cost about 100,000 US dollars.

Major Currency :

The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.

Minor Currency:

The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.

One Cancels the Other (OCO):

Two orders placed once with cautions to cancel the second order on execution of the first.

Open Position:

A current exchange trade that has not been closed.

Pips or Points:

The smallest unit a currency can be traded in.

Quote Currency:

The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.

Rollover:

Going beyond to the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate unmatched.

Technical Analysis:

Analysis of historical market data to predict future movements in the market.

Tick :

The lowest change in price.

Transaction Cost :

The cost of a FOREX transaction actually the spread between bid and ask prices.

Volatility:

A hypothetical measurement indicating the tendency of sharp price movements within a given timeslot.

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