Trading Term Glossary

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Before you start trading forex, it’s important to familiarise yourself with the basic forex terminology. Today we will take you on a journey through Forex trading terms. This is especially for those of you who are brand new to forex trading. Now we're going to get into some of the terms that you need to understand if you're going to become profitable as a Forex trader.

Forex trading term glossary

 Long - the act of buying it's when you believe a currency pairs price is going to rise. 

Short - the act of selling. It's when you believe a currency price will fall.

Pips - to measure the price in percentage or point in percentage.

Base pair: The currency you're buying when you trade a Forex pair, the quote currency is the currency that you're selling because when you are trading in the forex market, you're simultaneously buying one currency and selling another currency. 

Lot size - Your position size because currencies are traded in lots batches of currency used to standardize forex.

 Bid - Is the price that you can sell the base currency for.

 Ask - Is the price that you can buy the base currency for.

Leverage - This allows you to increase your exposure to a financial market without having to commit much capital at all. 

Margin: The term used to describe the initial deposit you put up when opening and maintaining a leveraged position when you're trading Forex.

Equity - Is the account balance plus the floating profit or loss of your open position, so that's all the money you have, or if you're losing that, you don't have to compare that to your balance.

Stop-loss - an advance order to sell an asset when it reaches a particular price point.

Take profit level - Is the price where your position will be closed in profit.

Margin call - Is the money in your account that can no longer cover your negative position.

Risk management - Is basically knowing how much you want to lose and make sure you don't lose more than that.

Spread - The difference between the bid and the ask. This is what the broker charges you whenever you place a trade.

Unrealised P/L - The profit/loss held in your current open position.

Realised P/L - Is the profit/loss that comes from a completed trade.

Balance - The starting amount of your trade account after the deposit is made.

Order - An order is an investor's instruction to a broker or brokerage firm to purchase or sell a security on the investor's behalf.

Buy limit - To buy at a price that is lower than the current price. 

Sell limit - To sell at a price that is higher than the current price. 

Buy Stop - To buy at a price that is higher than the current price.

Sell Stop - To sell at a price that is lower than the current price.

That's all for today folks!

We will be back with another blog soon. Stay tuned.

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