Forex and Contract for Differences investing is just like
any endeavor, where preparation is a valuable instrument. Understanding and
familiarizing yourself with terminology is valuable asset for any trader. Forex Online Currency Trading
Base currency & quote currency:
Currency is always traded in Pairs like EURUSD, GBDand EURJPY.First currency in the Pair is know as Base currency.
Second Currency in the Pair is know as Counter currency/ Secondary currency.
Bid Price/ Buy Price:
The
price at which the market buys a currency. This is the price that the
trader may sell the base currency.
Ask price/ /Sell Price:
The
price at which the market sells a currency. The trader can buy the base
currency at this price.
Long /short:
A
position that appreciates in value if market prices increase. When the base currency
in the pair is bought, the position is said to be long. An
investment positions that benefit from a decline in market price. When the base
currency in the pair is sold, the position is said to be short.
Lot:
A
lot is the standard unit size of a transaction. It represents the minimum
quantity which can be traded in any given instrument.For
Forex Trading, Markets.com standard lot size is 1,000 units of the quoted
currency.For
CFD Trading, the standard lot size varies from 1 to 500 units of the quoted
CFD.
Spread:
The
spread is the difference between the BID and the ASK price in the market
quotes. The ASK price is applicable to a BUY order and the BID price is
applicable to a SELL order. Pepper
stone operates using variable spreads, which are spreads that don’t have
the same constant value. A variable spread will condense and widen as market
conditions and liquidity change. Open PAMM Manager Account
Leverage:
This
is the use of borrowed capital to increase potential return. Trading on
leveraged capital means that you can trade amounts significantly higher than
the balance of your funds, which only serves as the margin. High leverage can
significantly increase the potential return, but it can also significantly
increase potential losses. The leverage is specified as a ratio, such as 200:1.
This means that the trader can trade amounts 200 times higher than the sum in
his or her margin account. If the trader has $1,000 in his account, it means
that he can now open trades worth $200,000.
Margin:
The amount of equity contributed by a customer as a
percentage of the current market value of the securities held in a margin
account.
Swap:
Swap is the overnight interest rate paid or deducted on the
open positions by the Forex broker.
Trailing Stop:
Trailing Stop-Loss Orders limits your Losses whereas allows
your profits to grow. The trailing stop adjusts the order rate as the market
price moves, but only in the direction of your trade. For example, if you’re long EUR/CHF at 1.5750 and you set
the trailing stop at 30 pips, the stop will initially become active at 1.5720
(1.5750–30 pips).
In the same example, if the prices moves up to 1.5795 then
the trailing stop will be automatically adjusted to 1.5765 (1.5795-30 pips).
Regards,
BlueMax Capital Ltd,
Mobile : +91 8870455111
E-mail : info@bluemaxcapital.com
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