Different Terms Used In Forex Trading

There are many terminologies that are designed specifically for forex trading and have to be understood well by people attempting the trade. Some of the basic words have been explained in this text, these include:

Long Buy: a trader is considered to be in a long position if he or she buys base currency and sells quote currency.

Quote Currency: the second currency that is written in a currency quotation expression is termed as the quote currency.

Short Buy: a trader is said to be in a short position if he does the exact opposite of long buy that is buys quote currency and sells base currency.

Ask: the term means that the dealer has agreed to sell a base currency in exchange for quote currency on the ask price.

Pips: The term means price interest points and is the points which indicate profit that is made by the forex trader. A single pip amounts to about one hundredth of one percent of a currency contract price.

Slippage: this is a scenario in which the trader has lost his chance of gaining a price interest point and this seldom occurs in the business.

Bid: this is the term which is applied to the process when the dealer decides to buy a base currency in exchange of a quote currency on a bid price.

Leverage: the term means that the buyer has been given a loan on the basis of a given deposit and this allows him to pick up $1000 by simply putting in a $100 with the broker. This allows the trader to en joy a leverage in his purchase which he will not be entitled to otherwise.