Dictionary of Forex terms
We present the dictionary of the terms used in FX trading on the daily basics.We will update the dictionary with new terms soon. Enjoy the lecture!
Appreciation – the increase of the price of the currency relative to other currency
Ask (ask price) – the price that the investor has to pay for the currency
Base currency – first currency in the configuration of currency (eg. in the case of the pair EUR/USD the base currency is euro)
Bid – the price of selling the currency by the investor
Forex Broker – an firm, who is the intermediary between the investor and the market. He realizes the orders of buying and selling given by the investor
Currency risk – the risk of loosing because of changing the currency rate
Deposit – the assets put into the trade by the investor, which are meant for investing and securing the open positions
Depreciation – the decrease of the currency rate relative to another one
EOD (End of day order) – the order of buying or selling valid till the end of the session
Quoted currency – the second currency in the configuration of currency (eg. EUR/USD the quoted currency is dollar)
Lot – the unit in a contract. It is the amount of currency that the investor wants to buy on the market. Usually 1 Lot is 100 000 units of the currency, eg. 100 000 EUR
Pips (Pip, Point, base point) – the lowest unit, that the rate of the currency can change by. One pips is 0,0001. For example a change from 3,2281 to 3,2282 is one pips.
Demo Account – an account on which you can practice your trade at Forex using virtual money
Bull market – the market with a growing trend
Bear market – the market with a decreasing trend
Spread – the difference between the rate of buying (Ask) and the rate of selling (Bid). The investors earn by buying cheaper and selling on a higher rate.