Glossary

There are several terms that are used in forex trading. People who are not in Forex trade would find it difficult to understand these jargons. This Forex Trading glossary aims at explaining the meaning of few of the most commonly used terms.

A

Ask Price – The selling price of a definite Currency in Foreign Exchange or Cross Currency Contract is the ask price. The base currency can be bought at this price. Example- USD/CHF 1.4527/32. Here 1.4532 is the ask price.

B

Base Currency – In a currency fair, the initial most pair is called the base currency. It shows the worth of base currency alongside the second currency.

Bear Market – A market eminent by declining prices.

Bid Price – The market is equipped to buy a definite Currency in a Foreign Exchange or Cross Currency Contract at a specific price and that is called bid price. The base currency can be sold at this price.

Broker – An entity or firm that acts as a liaison, by putting the buyers and sellers jointly for a cost or charge. A broker is an agent who would work in lieu of money and aid in getting the best of stocks by providing the best forex trading advice and forex trading information.

Bull Market – A market noted by increasing prices. This is a contrast of the bear market.

C

Cable – This is a jargon used by the traders of forex trade while referring to the US Dollar swap rate.

Counter Currency – In a currency pair the currency which is listed in the second list is called the counter currency.

Cross Currency Pairs or Cross Rate –This is a foreign exchange contract in which the primary foreign currency is traded next to a secondary foreign exchange. For example; EUR/GBP

D

Day Trader –An investor who takes position in merchandise that is then settled before the closing of the same trading day is called the day trader.

E

Economic Indicator – A Statistic that is issued by the government that indicates existing monetary expansion and steadiness is called the economic indicator.

F

Foreign Exchange – (Forex, FX) – The instantaneous buying and selling of one currency and the other

I

Inflation –This is the monetary condition, in which the prices for user goods rise, and the purchasing power falls down.

L

Limit order – The restriction on the minimum receivable price and maximum payable price that comes in an order is known as limit order. Example, the current price of USD/YEN is 117.00/05, and then the limit order to buy USD would be at a price below 102. (i.e. 116.50)

M

Market Maker – One who quotes the ask price and the bid price and is ready to make a dual market for financial instrument.

P

Pips – For any overseas currency this is the smallest price which is paid. Digits gets added or subtracted from decimal place ranking four, i.e. 0.0001. This is also called Points.

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