Hi Guys, Here are some common Terms used in Forex trading. If you are new or have just started Forex Trading in Kuwait, its valued resource to learn.
Pips:
The Price Index Point or the Percentage in Point is commonly known as PIP in the forex trading .Most currencies pair’s exchange rates are represented in four decimal currency pairs like this $0.0001. The change in one point in the fourth decimal point is referred to as the PIP.
Leverage:
Leverage is a ratio of when an increased volume of capital is borrowed using a smaller amount to magnify potential gains. Leverage is mostly used in the real estate field for transactions through mortgages to purchase houses.
Ask Price:
The Ask price also known as the offer price or ask, is the price the seller is willing to accept in exchange for a specific security.
Bid Price:
The Bid price is the highest current price at which you sell.
Bid-Ask Spread:
Bid-Ask Spread also known as spread , it’s the difference between a bid for sell price and ask price ( exchange rate at the which the traders buys the currency )
Base Currency and Counter Currency:
In the Forex market, forex deals can be quoted in each currency with two side’s .The currency pairs are represented by a three letter international code e.g. Yen and US Dollar pair is JPYUSD. The first currency pair “JSY“is the base currency, while the second currency pair “USD” is referred to as the counter currency.
Short-Selling Position:
This is when short sellers earn profit if the stock price goes down.
Long Position:
Is the buying of the currency pair and will profit if the price goes up.
Stop-Loss Order:
This is an order when a trader closes the trading position to stop further losses when the currency pair reaches a certain price.
Trailing Stop or Trailing Stop-Loss
The Stop-loss order is a useful tool that allows you to profit while cutting losses. It’s a percentage level below the market price.
Take-Profit order:
Take-profit is an automated order that allows you to close your trade once it reaches a certain level of profit. This order is normally set up with your account so that you will be ensured a certain level of profit before the rate drops again.
Risk-Reward ratio:
With a high rate in risk in the forex market, the risk-reward ratio helps you as a trader to measure or determine the level of risk involved in a trade.
Standard Lot Size:
The standard lot size is equivalent to 100,000 units of any currency.
Limit order:
Limit order allows the investor to limit the amount of time an order can be outstanding before it gets canceled.
Margin call:
This happens when you trading accounts when there is no money to support the open trades.
Support levels:
The Price Support levels are price areas that support when the traders find it difficult for the market prices to go any lower. About Me
