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Currency trading is not the monopoly of the nerds and the geeks
The general perception is that any and every person who is
involved in the business of trading of currency or foreign
exchange is a person who has a super high IQ. To hear words and
phrases like liquidity ratio, central bank intervention...
Managing bank liquidity in real time
Just a decade ago the concept of bank liquidity was for all intents and purposes only one for the Bank Regulator to really concern himself with. Certainly, a bank had to remain liquid a critical factor if it were to continue to enjoy the...
There Are Real, Live People Behind Currency Trading
The Internet offers an abundance of information about investing, currency trading, forex market, about how, when and what to do to earn more money in the easiest way possible. The information highway is practically a gold mine for traders that...
Welcome To The World Of Forex Trading
You no doubt have a ton of questions and are eager to learn what this popular investment option entails. This site is designed to give you the tools and techniques necessary to make smart investment decisions. Spend a little bit of time reading...
What Is Forex Trading?
Forex trading is nothing more than direct access trading of
different types of foreign currencies. In the past, foreign
exchange trading was mostly limited to large banks and
institutional traders. However recent technological advancements
have...
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Forex Glossary
Here are some of the most common terms used in FOREX trading.
Ask Price Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote e.g. EUR/USD 1.1965 / 68 means that one euro can be bought for 1.1968 UD dollars.
Bar Chart A type of chart used in Technical Analysis. Each time division on the chart is displayed as a vertical bar which show the following information the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.
Base Currency is the first currency in a currency pair. A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote - USD/JPY 112.13 US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.
Bid Price is the price a trader can sell currencies. The Bid Price is shown on the left side of a quote - e.g. EUR/USD 1.1965 / 68 means that one euro can be sold for 1.1965 UD dollars.
Bid/Ask Spread is the difference between the bid price and the ask price in any currency quotation. The spread represents the broker's fee, and varies from broker to broker.
Broker the intermediary between buyer and seller. Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.
Candlestick Chart - A type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.
Cross Currency A currency pair that does not include US dollars e.g. EUR/GBP.
Currency Pair Two currencies involved in a FOREX transaction e.g. EUR/USD.
Economic Indicator
A statistical report issued by governments or academic institutions indicating economic conditions within a country.
First In First Out (FIFO) refers to the order open orders are liquidated. The first orders to be liquidated are the first that were opened.
Foreign Exchange (FOREX, FX) Simultaneously buying one currency and selling another.
Fundamental Analysis Analysis of political and economic conditions that can affect currency prices.
Leverage or Margin The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 you can trade currency worth 100 times the amount of your deposit.
Limit Order An order to buy or sell when the price reaches a specified level.
Lot The size of a FOREX transaction. Standard lots are worth about 100,000 US dollars.
Major Currency The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.
Minor Currency The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.
One Cancels the Other (OCO) Two orders placed simultaneously with instructions to cancel the second order on execution of the first.
Open Position An active trade that has not been closed.
Pips or Points The smallest unit a currency can be traded in.
Quote Currency The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.
Rollover Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.
Technical Analysis Analysis of historical market data to predict future movements in the market.
Tick The minimum change in price.
Transaction Cost The cost of a FOREX transaction typically the spread between bid and ask prices.
Volatility A statistical measure indicating the tendency of sharp price movements within a period of time.
About the Author
This article provided courtesy of http://www.daytraderfutures.net
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