Forex Jargon Impress your friends with your jargon FOREX

Impress your friends with your jargon FOREX
As with any new skill you learn, you need to learn the lingo ... especially if you want to win the heart of your love. You, the newbie, must know certain terms like the back of your hand before making your first trade. Some of these terms, you have already learned, but it never hurts to have a little review."Hi ... I have a doll ENOOOOORME leverage! "Major and minor currencies
The eight most frequently traded currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD and AUD) are called the major currencies. All other currencies are called minor currencies. Do not worry about the minor currencies, they are for professionals only. In fact, on this site, we will mainly cover what we call the Fab Five (USD, EUR, JPY, GBP and CHF). These pairs are the most liquid and most sexy.Base Currency
The base currency is the first currency in any currency pair. It shows how much the base currency is a measured value of the currency per second. For example, if the USD / CHF rate equals 1.6350 then one USD is worth CHF 1.6350. In the foreign exchange market, the U.S. dollar is normally considered the 'base' currency for quotes, meaning that prices are expressed in units of $ 1 USD per the other currency quoted in the pair. The main exceptions to this rule are the British pound, euro and Australian dollar and New Zealand.Quote Currency
The quote currency is the second currency in a currency pair. This is often called the pip currency and any profit or loss is unrealized expressed in that currency.Pip
A pip is the smallest unit of price for any currency. Nearly all currency pairs consist of five significant digits and most pairs have the decimal point immediately after the first digit, or EUR / USD equals 1.2538. In this case, one pip is equal to the slightest change in only the fourth decimal point - that is, 0.0001. Therefore, if the quote currency in any pair is USD, then one pip always equal to 1 / 100 of a cent.
A notable exception is the USD / JPY pair where a pip equals $ 0.01.

Bid Price
The application is the price at which the market is ready to buy a specific currency pair in the Forex market. At this price, the trader can sell the base currency. It is displayed on the left side of the quotation.
For example, in the quote GBP / USD 1.8812/15, the bid price is 1.8812. This means you sell a pound to 1.8812 dollars.Ask Price
Demand, the price at which the market is willing to sell a specific currency pair in the Forex market. At this price, you can buy the base currency. It is displayed on the right side of the quotation.
For example, in the quote EUR / USD 1.2812/15, the ask price is 1.2815. This means you can buy one Euro for 1.2815 dollars. The sale price is also called the offer price.Bid / Ask Spread
The spread is the difference between the bid and ask prices. "Submission great figure" is an expression referring to the dealer the first digit of the exchange rate. These numbers are often omitted in dealer quotes. For example, USD / JPY rate might be 118.30/118.34, but would be quoted verbally without the first three digits of "30/34."Quote Convention
Exchange rates on the Forex market are expressed using the following format:

    Base Currency / Quote Currency Buy / Sell
Transaction Cost
The essential feature of the bid / ask spread is that it is also the cost of trade for a round turn trade. Round-turn means both buy (or sell) trade and an offsetting sell (or buy) trade of the same size in the same currency pair. For example, in the case of EUR / USD 1.2812/15 to the cost of trades is three pips.
The formula for calculating the cost of trade is as follows:
Cost of trade = Ask Price - Bid PriceCross Currency
A cross currency is any pair in which neither currency is the U.S. dollar. These couples have an erratic price behavior since the company has, in effect, initiated two USD trades. For example, initiating a long (buy) EUR / GBP is equivalent to buying a EUR / USD currency pair and selling a GBP / USD. Cross currency pairs frequently carry a higher cost of trades.Margin Margin
When you open a margin account with a broker back online, you must deposit a minimum with this brooker. This minimum varies from Brooker and Brooker can be as low as $ 100 and a maximum of $ 100,000.
Each time you run a new profession, a certain percentage of the account balance in the margin account will be set aside as the initial margin requirement for new business based on the pair of currencies underlying its current price, and the number of shares (or lots) traded. The lot size always refers to the base currency.
For example, say you open a mini account which provides a 200:1 leverage, or 0.5% margin. Mini accounts trade mini lots. If you were to open a mini-lot, instead of having to provide the full $ 10,000, you only need $ 50 ($ 10,000 x 0.5% = $ 50).Leverage
Leverage is the ratio between the amount of capital used in a trade for the required security deposit (margin). It is the ability to control the dollar amounts of high security with a relatively small amount of capital. Leverage varies significantly with different brookers, ranging from 2:1 to 400:1.Margin + = Possible Deadly Combination Lever
Trading currencies on margin lets you increase your buying power. Meaning that if you have $ 5,000 cash in a margin account that allows 100:1 leverage, you could purchase up to 500,000 dollars of currency because you only have to post one percent of the purchase price as collateral. Another way of saying this is that you have $ 500,000 in purchasing power.
With more purchasing power, you can increase your total return on investment with less cash outlay. But be careful, trading on margin magnifies your profits and losses.Margin Call Margin Call
All traders fear the dreaded margin call. This occurs when your brooker notifies you that your margin deposits have fallen below the minimum level required due to the open position has moved against you.
While trading on margin can be a profitable investment strategy, it is important that you take the time to understand the risks. Make sure you understand how your margin account, and be sure to read the margin agreement between you and your brooker. Always ask questions if there is anything not clear to you in the agreement.
Your position may be partially or completely liquidated if the available margin in your account is below a predetermined threshold. You may not receive a margin call before your positions are liquidated (the ultimate birthday gift unexpected).
Margin calls can be avoided by monitoring your account balance on a very regular basis and using command "stop loss (see below) on each open position to limit risk.