Forex terminology-FX terminology




Those who want to be successful in life must prepare for their projects. When it comes to money, this should be particularly true. Hard-earned money means life time. Who wants to throw away his life in a figurative sense. Therefore, it is important for the trader on the FX market to internalize and understand the following terminology. The concepts do not only condition themselves, but also have a significant effect on their interaction in practice.
A good preparation
A preparation for trading on Forex is once generally understood and on the other, specifically on each individual trade. In general terms, the trader has to understand and Handel.


Brokers and other
are important terms. In addition, the abilities and skills are still to be dealt with. The most important sub-terms for successful trading are hidden behind the term chart alone. With the help of chart analysis, individual trades are meticulously prepared.


Conceptual explanations
In forex trading, the offer always refers to the current exchange rate. An offer is always valid for a currency pair. The front currency of the pair is the quoted currency, while the second currency is referred to as the counterpart. The information is given with an accuracy of 1/10,000.


Currency pair


The figure shows the sell rate of 1.37884 for the currency pair EURUSD. The bid is the exchange rate at which a currency is offered for sale. The buying (ask) is the exchange rate at which a currency can be acquired. In the above figure, this means the trader must pay 1.37914 US $ for 1 euro.


There are standard trading sizes for forex trading. These are specified in lot for a transaction or its smaller units. In the illustration, the 0.3 would be lot. The value of a currency offer is quantified in PIP. Almost all currency pairs quotation the PIP with the 0.0001 part of the currency. The profits from the trade are also indicated in PIP. The trader can calculate the value of the PIP. The crime is:


1 pip/exchange rate * lot = pip Value


The spread is the difference between the sales (bid) and the buying (ask). This value quantifies the merit of the broker. Low spreads ensure that the trader can get in and out of the trade with a low Slippage. The amount of capital required to open or maintain a position is the margin. In forex trading It is the security that is to be controlled by the trader at. The trading value increases the trader with the leverage, the leverage. This includes the use of borrowed capital to increase the possible return.


Trading on the basis of debt capital means that traders can trade amounts that are much higher than their capital. The leverage is specified as a ratio (e.g. 200:1). This means that a trader can trade amounts that are 200 times higher than the sum in his trading account. There is a different level of interest rates in the currency areas. The rate is the price for borrowed money. These differences can be reflected in the swap.


The trade
Trader can go short or long for trading.


– Long


Any trader who speculates on an appreciation (speculation), hopes that the price increases when buying a currency pair or CFDs.


– Short


Every trader who speculates on a devaluation (bear market speculation) hopes that the price of a currency pair or CFDs is declining.


Traders prepare the trades thoroughly. A fundamental analysis is carried out for the basic determination of the trend direction. With the technical analysis and especially with its component chart analysis, the right time points are planned for the entry into the trade, the setting of the trade marks and the exit from the trade. With the help of the chart image and the indicators, the trader determines the arguments for his trade decision. He continues to use a trade strategy tailored to his needs. This is for the trader law. With perseverance and discipline he pursues this and through evaluation of expired trades it is constantly improved. The basis for this is also the Tradingtagebuch.