TERMS

LONG: long means buying a currency and selling another currency. For example if you where trying to trade the EUR/USD, LONG will mean buy the EUR and sell the USD.

LONG = BUY

SHORT: short means selling a currency and buying another currency. For example if you SHORT the EUR/USD currency, it means you sell the EUR and buy the USD.

SHORT = SELL

BASE CURRENCY: in any currency pair the base currency is the first stated currency in the example above EUR/USD the EUR is the base currency and by base I mean the basis for any transaction involving the pair.

QUOTE CURRENCY:  in any currency pair the base currency pair the base currency is the second stated currency, example EUR/USD the USD is the quote currency. Another name for the quote currency is counter currency.

BID PRICE: the bid price is the price the market is willing to buy a currency from you.

ASK PRICE: the ask price is the price currencies are sold

SPREAD:  the spread is the difference between the ask and the bid price. For example if your trading the EUR/USD and the EUR is stated on your trading platform to equal 1.4953 and the USD is stated to equal 1.4957 the spread is the difference between the two  which is 4.

PIP:  the pip is the smallest increment in price of any currency. In the example above the EUR is stated to equal 1.4953, if it increases to 1.4954, it increased by one pip.

Lot: a lot is a specific volume or quantity of currency you are allowed to buy or sell in any transaction. Forex brokers give 100,000 lots known as standard lots, 10,000 lots known as mini lots and 1,000 lots known as micro lots.

Rollover Charge: rollover charge is a daily rollover interest rate someone will either pay or earn (I intend to earn instead of paying). Many  market makers pay or receive rollover charges if someone leaves a trading position open until their closing time, for many brokers it’s 5 PM EST.

Leverage: leverage means using a small amount of money to trade with a large amount of money. brokers offer leverage to traders to help them make profit or loss. Depending on the broker a trader could receive 100:1, 200:1 300:1 or 400:1 leverage, this means that, for every one dollar a trader has, he is given 100, 200, 300, 400 Dollars to trade.

USED MARGIN: used margin is the money you’re using to trade.

USABLE MARGIN: usable margin is the money you have in your trading account.

In other words used margin is the money you have in your hand so to say and usable margin is the money you have in your bank account.

MARGIN CALL: when the money you have in your account is very small due to continuous loss, your broker may tell you to close your trading positions or they may close it for you, so you don’t lose all your money. When this happens it’s called, a margin call.

   

Thanks for reading.