Forex Reader

I am happy that you are back as today we are going to discuss the basics of the Forex language practically. Take your pen, take a seat and let’s get started.

Each sphere of business has its own “language”, clearly speaking each area has its own terminology and Forex is not an exception. Despite the specificity of many of the terms of forex trading, they are a necessity, without which it won’t be possible to explore the forex market.

Therefore, every trader seeking to succeed in the market should master the Forex terminology perfectly ,of course if you do not want to be fooled.

Now let’s check out some basic forex trading terms:

Rate – the price of one currency expressed in units of another currency.

Base currency – the first currency in the currency pair. Its value is determined as opposed to the other currency pair. For example, if we take a currency pair EUR / USD, here EUR will be the base currency.

Quote currency – the second currency in a currency pair. Its value is defined in opposition to the cost of the basic currency. For example, in the next couple of euro / US dollar, the Quote currency is the US dollar.

Bid price -  sale price.

Ask –  purchase price.

Spread -  the difference between the sale price and the purchase price. That is difference between the bid and ask price.

Pip -  the minimum amount of change in value of the currency.

Transaction – operation of opening / closing positions.

Open position -  buy or sell a currency, thereby committing the transaction.

Close position – close the sale transaction.

Stop-loss – stop order used to limit losses. Is triggered to close the position as it moves toward the loss.

Flat (Square) — when your positions are closed and your are  in neutral state.

Order — order for a broker to buy or sell the currency with a certain rate.

Margin – a cash deposit that a market participant must have to ensure the trading operations

I think this entry will prove useful for all Forex beginners and I strongly recommend that you read them all!

If you are a newbie in the Forex market, you surely must know that this is a very risky business. No doubt,  the trading in financial markets is a sphere of activity, which gives a chance to become rich and independent, even a simple man who has no experience in conducting financial transactions and business activities can be engaged in Forex market. This is exactly what attracts many newbies to Forex,  sad as this may sound  they usually end up losing money.

However I hope you will not be the one and if you have nevertheless decided to engage in Forex trading, then at least check out some simple tips that I have here.

The first advice to the newbie Forex trader: spend several months on reading Forex literature and studying forex market,  be sure that the knowledge that you gain during this time, will save you money in the future.

Coming up with some more simple tips:

• Decide on the amount of money that you can afford to lose
• Never aspire to earn all the money immediately
• Do not loss the whole deposit for short run
• Remember that all new tactics, strategies, indicators, etc. 80-90% are  well-forgotten old ones;
• Block others’ opinions
• If you are not sure you had better step aside
• Do not trade too many currencies simultaneously
• Find yourself a good Forex specialist  who will explain the principles and practice, who will be experienced in the techniques of successful trading;
• Always be prepared for losses and take them with dignity
• Remember that the money – it’s just money, your life is much more important.

Take these tips seriously and only after you can open a door to Forex market!

Photo credit to shadphotos