Fx Terms You Wouldn’t Want to Live Without (When Trading):
The ask price (right quote display) is the price at which traders can buy the base currency. If you think that the EUR value will increase then you can choose to buy it for USD at the price displayed in the ask quote.
See also Bid Price
Dealer slang for the AUD/USD currency pair.
See also Currency Pair
The base currency is the first currency listed in any currency pair. Its value is determined against the counter currency’s value. For example, if the rate of the EUR/USD pair is 1.3525, then the EUR is the base currency and it is worth 1.3525 USD.
See also Counter Currency, Currency Pair, Rate
A Bear market is a pessimistic market with declining prices.
See also Bull
The bid price (left quote display) is the price at which traders can sell the base currency. If you think that the EUR value will decrease then you can choose to sell it for USD at the price displayed in the bid quote.
See also Ask Price
A Bull market is an optimistic market with rising prices.
See also Bear
See Ask Price
Also known as Sterling. Dealer slang for the GPB/USD currency pair.
See also Currency Pair
The counter currency is the second currency in any currency pair. Its value is determined against the base currency’s value. For example, in the following currency pair EUR/USD, the counter currency is USD.
See also Base Currency
A price quote consisting of any currency quoted against a currency that is not the USD. The quote is made up of the individual exchange rates of the two currencies against the USD.
See also Dollar Rate
The two currencies that the exchange rate is comprised of. One of the currencies is bought, and the other is sold at the same time.
See also Base Currency, Counter Currency
The practice of opening and closing positions within the same trading day, so that at the end of the day the trader has no open positions.
See also Position Trading
The Fed is short for Federal Reserve, which is the central banking system of the United States. The Fed issues announcements regarding U.S. monetary policy which can have significant effect on the Forex market.
See also Fundamental Analysis
Forex, or FX, stands for Foreign Exchange. Forex is the simultaneous buying of one currency and selling of another. Since you purchase money with money, there are two transactions (buying and selling) happening at the same time.
This type of analysis focuses on the macroeconomic factors that influence the value of a country’s currency. Traders open positions based on how they think changes in these factors are bound to affect different economies.
See also Technical Analysis
The practice of opening several positions at once where one position minimizes the risk of another position. Click here to learn more about hedging.
See also Leverage, Margin
Dealer slang for the NZD/USD currency pair.
See also Currency Pair
Leverage is a loan from your broker, which enables you to trade with a small amount of capital. It can increase your potential profit, but it can also increase your risk. Click here to learn more about leverage.
See also Margin
Going long means opening a position in which the trader buys currency in hopes that this currency’s value will increase (buy low, sell high).
See also Short Position
Dealer slang for the USD/CAD currency pair.
See also Currency Pair
The standard unit of trading. One standard lot equals 100,000 units of the base currency, a mini lot equals 10,000 units, and a micro lot equals 1,000 units. eToro’s standard trade volume is the mini lot.
See also Leverage
The minimal cash deposit that you have to put up for the transaction. Trading forex on margin increases your buying power, but it can also increase your losses. Click here to learn more about margin.
See also Leverage
See Ask Price
Pip is the smallest price increment in the last digit in the rate – usually the fourth digit after the decimal point (apart from the USD/JPY).
See Counter Currency
See Pip
A consistent movement of currency prices in a certain direction. Traders try to spot trends in order to capitalize on their potential. Click here to learn more about trends.
See also Fundamental Analysis, Technical Analysis
See Counter Currency
Rate or quote, is the price of one currency in terms of another.
See also Base Currency, Counter Currency
The amount of money that a trader can afford to risk, the potential loss of which would not affect their lifestyle.
See also Leverage, Margin, Hedging
See Bid Price
Going short means opening a position in which the trader sells currency in hopes that this currency’s value will decrease (sell high, buy low).
See also Short Position
The spread is the difference between the bid price and the ask price.
See also Bid Price, Ask Price
A trade order which automatically closes an open position at a specific price in order to prevent losses in case the market moves against your position. Click here to learn more about Stop Loss orders.
See also Take Profit
Dealer slang for the USD/CHF currency pair.
See also Currency Pair
A trade order which automatically closes an open position at a specific price realizing a specific amount of profit. Use this order to realize your gains. Click here to learn more about Take Profit orders.
See also Stop Loss
This type of analysis focuses on chart patterns of currency movements. It assumes that a currency’s future movements can be predicted by looking at past behavior. Click here to learn more about technical analysis.
See also Fundamental Analysis, Price Trend
