10 Forex Trading Terms You Must Understand Before You Trade

When you begin forex trading, you will come across new word forex trading Terms  and phrases related to forex trading . To assist in your trading, we have compiled a list of common forex words and phrases you will encounter.

pips  In forex trading, a pip represents a point in percentage. It stands for the fourth decimal position in the majority of currency pairs. This is a fairly popular term that is frequently used to describe how a trade’s price moved.

bull run   When the majority of traders are buying and there is a very high demand for a currency, the price will rise sharply. This is referred to as a bull run or a bull market.

 

spread  The spread is essentially the broker’s cut. It is the difference between the price your broker pays to purchase a currency and the amount you receive when they sell it to you. The purchase price is referred to as the ask price, while the selling price is referred to as the bid price. The ask and bid prices are typical turns in currency trading.

currency pairs   Two currencies that are traded together, one against the other, are called a currency pair. The currency being bought is the base currency, which is the first one in a pair. The second currency is used to buy the base currency.

slippage   This is the discrepancy between the trade’s value when you cancel it and when it is truly cancelled. If your internet is slow, it may take longer for your broker to cancel a deal than for you to do so on your system. In the end, this may result in pricing adjustments.

 

currency pair abbreviations and what they stand for

Major Currency Pairs that make up common trading termes
  • EUR/USD or the Euro vs. the U.S. dollar.
  • USD/JPY or dollar vs. the Japanese yen.
  • GBP/USD or the British pound vs. the dollar.
  • USD/CHF or the Swiss franc vs. the dollar.
  • AUD/USD or the Australian dollar vs. the U.S. dollar.
  • USD/CAD or the Canadian dollar vs. the U.S. dollar.

GBP/JPY, EUR/JPY, EUR/CHF, and EUR/GBP.

Now you know the forex trading terms. Try a demo account now.