Common Forex Trading Terms By Andy Hook At Isnare.com Ezine Articles

Why are there a lot of people who invest in forex when the market is said to be bullish? What is the difference between ask and bid price? Most definitely, it would be difficult for you to make the most of forex trading if you don’t know what certain terms mean.

For those who are learning more about forex, it’s time to know what these words stand:

Forex

This comes in different terms. You have currency market, FX, forex, and, of course, foreign exchange. This word refers to a place where different institutions from all over the world, including banks and huge companies, would invest their money or trade in currencies. In fact, countries would also take note of foreign exchange since it allows them when they want to make international investments or go for global trading.

Bull

A bull is usually a description of a market that has steadily increasing prices. This means that your currency will have a higher exchange rate in the market, allowing you to earn profits in the end. This, however, doesn’t just refer to one currency. Normally, they are being evaluated as a pair, such as the exchange rate between British pounds and Japanese yen. Most investors would want to grab a bullish market because of high returns.

An antonym of bull is the bear market, where the prices quickly and steadily decline.

Ask Price

The ask price refers to the price of the currency that you’re willing to buy. An opposite of this is the bid price, which is the price you are willing to accept as sale cost for your currency.

Forex Quotes

This refers to the equivalent values of currencies. They are also expressed in pairs. For instance, a U.S. dollar is equal to 1.5478 in euros. This is the forex quote of USD=EUR.

Margin

This word refers to the collateral that you have to set aside for you to be able to close a deal in forex market. This is usually equal to 1 percent of the sale price. Depending on your risk management strategies, it may be both a boon and a bane for investors.

Technical Analysis

This is a process where an investor or a broker looks into the historical forex data to check the current and future trends of certain currencies in the market. Most would often leave this work to a technical analyst, whose only work is to monitor the market in different factors such as inflation or interest rate. However, there are already others who are using software to help them in that.

Base Currency

In a forex quote, the currency that is found on the left side is known as the base currency. This doesn’t have any value except 1. The other side is called counter currency. Both make up the forex quote.

Forex Deal

When you’re able to make a sale, it means that you have made a forex deal. If you’re still in the process of making a deal, you are referred to as in an open position.

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