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.