Whenever you encounter a forex term and you do not know what it means, the glossary below might be helpful because it contains the main terms used in forex trading:
Ask Price = The price level at which the traders are able to buy the base currency. For example, if you believe that the EUR rate will increase then you can buy it for USD for the price displayed at the ask quote. The ask price is the same with the buy price.
Bid Price = The price level at which the forex participants can choose to sell at the base currency. For example, if you believe that the EUR rate will decrease then you can sell it for USD for the price displayed at the bid quote.
Currency Pair = This refers to the two currencies that comprise the exchange rate, such as EUR/USD. One of the currencies is bought, while the other is sold. In case of the currency paid EUR/USD, the EUR currency is bought, while it is paid with USD currency.
Leverage = Financial tool which used in forex. This finance tool allows you to increase your return on investment. Leverage is used to increase their returns which will maximize the profits, but it can also work in the investor’s disadvantage if not carefully handled. Using leverage you can stimulate amount multiplied by up to 500 of your position margin.
Market Volatility = Common tool used in forex trading terminals which shows the probability of the price currency deviation. Forex offers some specific tools and indicators to show the volatility.
Position = In situation where the trader or forex participant is in while performing transactions for buying or selling currency. He/She might be in a long position (if the currency rate will increase and he will sell) or in a short position (if the currency rate will decrease).
Pip = The smallest price increment, 100th part of 1%, 0.0001. The fourth digit following the decimal point.
Spread = The difference between the bid price (sell price) of a currency and the ask price (buy price) of a currency. The spread is the gaining of the dealers and other forex participants.
Margin = Amount of money you put into the Forex contract you open. In other words, it's the investment which you risk.
(Position = Margin * Leverage)
Jane Smith, Colorado
“I decided to write to thank you for the great information you gathered and offered it to regular persons like me. I was very reluctant at first, but I took your advice and create a free practice account. Then, I found your e-book as very helpful and tried my luck on forex. I practiced for almost 1 month and then started using my own money. I am currently gaining approximately $600 per week, spending 3-4 hours a day on forex. I will continue using forex and decided to earn more because I now know that it works!”
Mark Mooray, Boston
“I decided to write to thank you for the great information you gathered and offered it to regular persons like me. I was very reluctant at first, but I took your advice and create a free practice account. Then, I found your e-book as very helpful and tried my luck on forex. I practiced for almost 1 month and then started using my own money. I am currently gaining approximately $600 per week, spending 3-4 hours a day on forex. I will continue using forex and decided to earn more because I now know that it works!”