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Forex Trading Primer 22 - Forex Terminology to Remember When Trading Forex

When you are learn cashback forexg a new skill, you need to learn the lingo, especially if you are hoping to win the heart of your loved one You, as a novice forex trader, must learn some specific terminology before you make your first trade There are some terms you may already know, but it doesnt hurt to review them again How much leverage do you have? The man obviously m Forex rebate kingunderstood the ladys meaning, so he still needs to learn more about Forex terminology! Primary and secondary currenciesThe eight most commonly traded currencies in forex trading (USD, EUR, JPY, GBP, CHF, CAD, NZD and AUD), also known as the primary cashbackinforex, which is the most liquid and most commonly usedAll other currencies are known as secondary currenciesThe base currencyThe base currency is the first currency in any currency ForexrebatekingThe currency quote shows the value of the base currency when measured against the second currency For example, if the USD/CHF rate is equal to forexrebateindonesia.6350, then one US dollar is worth 1.6350 CHF In the foreign exchange market, the US dollar is usually considered the base currency in the quote, i.e. the currency quoted in the currency pair is converted to other currencies in one US dollar. It is usually called the spread currency, from which any unrealized profit or loss is expressed in pips, the smallest currency unit of any currency pair. i.e. 0.0001 Therefore, if in any currency pair where the dollar is the quoted currency, one point is equal to 1/100th of a cent The only exception is the Japanese yen currency pair, in which case one point is equal to 0.010.1 tenths of a point i.e. 0.1 point Some brokers offer currency pairs quoted at 0.1 point For example, if EUR/USD fluctuates from 1.32156 to For example, if EUR/USD fluctuates from 1.32156 to 1.32158, then it fluctuates by 0.2 pips The bid price is the price at which the market intends to buy a currency At this price level, traders are able to sell the base currency It is shown on the left side of the currency pair quotes Take GBP/USD for example, if GBP/USD is quoted at 1.8812/15, then the bid price is 1.8812 This means that the price at which you sell 1 GBP is 1.8812 USD Ask Ask is the price at which the market intends to sell a particular currency pair at which you are able to buy the base currency It is shown on the right side of the currency pair quote For example, if EUR/USD is quoted at 1.2812/15, the Ask price is 1.2815, which means that you would pay $1.2815 to buy 1 Euro The bid/ask spread is the difference between the bid price and In a dealer quote, the number in front of the decimal point is usually omitted For example, the USD/JPY rate may be 118.30/118.34, but a verbal quote may omit the first three digits and say 30/34, in this example, the USD/JPY spread is 4 pips Quote Equation The foreign exchange market rate is used in the following format: Base Currency/Quote Currency = Bid/ask price transaction cost The salient feature of the bid/ask spread is that it is also the transaction cost required for a full trading process full trading means that when implementing a buy (or sell) of a currency pair, by hedging the sale (or buy) of the same size of the same currency pair, this full trading process is called full trading For example, the EUR/USD exchange rate is 1.2812/15, then The transaction cost is 3 pips The formula for calculating the transaction cost is: Transaction cost (spread) = Ask price - Bid price Cross currency pairs A cross currency pair is a currency pair that does not contain the U.S. dollar An investor making a cross currency pair trade is effectively the same as making two U.S. dollar-related trades For example, initially buying EUR/GBP, which is the same as buying EUR/USD and selling GBP/USD Cross currency pair trades usually When you open an account with a forex broker, you must deposit the minimum funds required by the broker, which can range from as little as $100 to as much as $100,000 depending on the broker. The lot size always refers to the size of the base currency lot. For example, if you open a mini account with 200 times leverage, or if the margin requirement for this account is 0.5% the mini account is trading a mini lot One mini lot is equal to $10,000 If you intend to trade a mini lot, you do not need to provide the full $10,000, you only need $50 That is ($10,000 * 0.5% = $50) Leverage Leverage is a ratio between the capital required to conduct foreign exchange transactions and the required margin With the help of leverage, foreign exchange investors are able to use a relatively small amount of capital to conduct large-scale foreign exchange trading forex margin trading leverage ratio varies from broker to broker, ranging from 2:1 to 500:1 Now that you have mastered the basic terminology of foreign exchange trading, now why not ask her for help? Now that you have mastered the basic terminology of forex trading, why not show her different trading orders now?
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