Forex trading

Market Order: This is a request to buy for the Ask amount.

Bid: This is the brokers 'buy' amount.

Ask: This is the brokers sell amount.

Spread: This is the difference between the asking and bidding amount. It is most often measured in pips. As far as the customer is concerned, the tighter the spread the better it is.

Carry cost (also known as 'Premium' or 'Interest'): This is the amount, which is mostly given in $ or number of pips in one day to hold a position open.

Fundamental Analysis: An assessment as a strategy or macro. Currencies are traded using factors with exception to the action of the price. These factors are inclusive of the country’s state (of that particular currency), policies, and certain additional fundamental factors.

The future of currencies: This term is used for contracts for the future in a certain exchange, in particular the ‘CME’, better known as the Chicago Mercantile Exchange. It is stated in the value of the currency and in dollars(US). The exchange will make future contract settings standard.

Limit: This is a request to buy or sell when the market reaches a specific amount.

Liquidity: When the market has more liquidity, the smaller bids or spread will be quoted. Liquidity is about volume and how active the market is. It determines how cost effective positions and orders can be traded.

Margin: The margin is the sum needed in a customer account to be able to open up a position or to keep a position open. E.g.: For a position of $100,000 and a margin of 1% that means that $1,000 in funds are needed.

Leverage: This is the stated by a multiple. The traded sum goes beyond the margin needed in order to trade. Let’s say if the named sum that has been traded is $100,000 and the margin needed is $2,000, then the customer could have a leverage of fifty times e.g.: ($100,000/$2,000).

Offer: An offer is the amount at which a forex broker is able to ‘sell’.

Spot Foreign Exchange: Better known as the market of ‘interbank’. It means to trade currency between 2 parties, mostly well-known banks. The Spot Foreign Exchange is mainly traded on the basis of margins, and the website focus is mainly on this. The Spot Foreign Exchange is popular and more liquid than currency futures, especially by big organizations and mangers of money.

Pip: In terms of currency this is the tiniest increment. Many people call it ‘ticks’ when dealing in the future markets. E.g.: A change from .9015 to .9016 in EURUSD is 1 pip. In addition a change from 128.51 to 128.52 in USDJPY is also 1 pip.

Stop: This is a request to buy or sell at a time when the market reaches a specific amount.

Technical Analysis: This is analysis done on the action of the price in the market, and helps to make decisions while trading, regardless of what the factors are fundamentally. The most well known technical studies are listed below. If you would like to see more information, just click:

Drawdown: This is the ratio of the account devalue. It will be stated in dollars or as a percentage. To specify further: The value of a customer’s account went up from $10,000 to $20,000, then it took a drop and went to $15,000, and went higher again up to $25,000, then the max drawdown is $5,000 (which took place when the amount changed from $20,000 down to $15,000), although the customer’s account didn’t suffer any losses.

Premium: This is the cost of holding the position ‘open’.

Margin Call: This is a request from the forex broker, asking for more money to ensure the trader keeps the position open. If a trader has a ‘margin call’, this could mean that the position may be automatically closed through the broker as that particular position doesn’t have enough money from the deposit. This stops the customer from incurring more losses than necessary.