In the Forex market, there are lots of terms, acronyms, and words that every Forex trader should know so that they can build their knowledge in trading. These terms may seem critical to the traders who are new to this platform. This article will be helpful for the people who made up their minds to enter into the Forex trading platform.
Currency pair
There are 180 currencies recognized by the United Nation. As a trader, you need to select the currency that you want to trade. Currency always comes in pair and you should know this. Before choosing your currency, dig a bit to and evaluate the performance of the economy. By the performance of the currency, we mean to say the liquidity of the currency. There are three groups of currency pairs and they are the major pairs, cross pairs, and cross pairs.
Major pairs
There is a total of 8 major currency pairs and all of them contain USD. They are EUR/USD, GBP/USD, AUD/USD, USD/CAD, USD/JPY, NZD/USD, GBP/USD, and EUR/GBP. These major pairs are more liquid in the Forex market.
Cross pairs
These are the currencies without the U.S. dollar as the base currency. GBP/AUD, EUR/CAD, and NZD/CAD are the example of cross pairs. Note that the price movement of the cross pairs often becomes extremely volatile. During such a critical strategy, it is better to trade commodities rather than looking for the trade signals in the cross pairs.
Exotics
Exotics currencies are not very well-known currency including South Africa Rand, Hungarian Forint, and Polish Zloty. Try not to take the trades in the exotic asset as the price movements are very unstable and false spikes are very common.
Leverage
The term leverage means the money borrowed by the traders within a trading account. Leverage provides the opportunity to traders with less capital to invest a big amount of money and make a huge profit. But always try to trade with low leverage as it will keep the fund safe.
Bid and Ask price
Bid price refers to the price in which the trader is keen to sell a currency pair and the asking price means the price in which the trader is keen to sell a currency pair. Spread indicates the difference between the bid and ask price.
Long andShort
Going long means to buy half of a currency pair while Going short means to sell half of a currency pair. When a trader is going long, he is expecting the price of the currency to rise and when a trader is going short, he hopes the currency price will decrease.
Bullish and Bearish
When the price falls in a candle than its opening price, we call it a bearish candle, and when the closing price of the candle is higher than the opening price we call it a bullish candle. In other words, when the buying power is more than selling power, it is called a bullish candle and when the selling power is more than the buying power it is called a bearish candle.
Conclusion
From the above discussion, you have learned many technical terms which will help you work in your trading platform. Traders should have vivid knowledge about all the technical terms otherwise they won’t be able to earn the position of their dreams. So, if you have the intention to take a position in the Forex marketplace, you should not delay anymore to learn things related to trading which are unknown to you.
We know that remembering all the terms, words and acronyms is not easy. So, take time and understand the terms carefully, then you will find it easy as well as helpful when you will start trading. If you think that you will improve without understanding these terms properly, then you are wrong. To build up a career in trading you need to know and understand all these terms.
