The forex has some of its own jargon that is used by Forex brokers
and traders. We've put together a brief list of the most used forex terms and what they
mean in layman's terms.
Ask / Offer Price
The ask and offer price is the price at which the industry is willing to trade the
currency. This is the level at which a trader can purchase the currency.
The buying price is located on the right side.
Bids
The bid is the amount at which the trader is willing to purchase the currency at.
Broker
Just like in the stock market and equity markets, brokers work on behalf of their investors.
European Monetary Unit
EMU is ascribed to the countries that have adopted the Euro currency.
Forward
A forward deal is one that will occur at a predetermined point in time. The forward
trades in the forex are often shown as a margin above or below the spot rate.
It is basically a neutral deal.
Fundamental Analysis
The analysis of key economic and political movements that are likely to affect the market.
Margin
Traders deposit funds using a margin as a safeguard if there are any adverse market movements.
Margin Call
A brokers request to refill depleted margin stocks to cover the minimum level in order to continue.
Pip (Point)
A pip is the smallest possible denomination at which an exchange of currency can take place.
Short
Selling something without actually owning it, which is primarily done when the value declines.
Spread
A spread is the pip differential between the price at which you buy and sell currencies.
Stop Loss Order
Market indicator which means that once an exchange reaches a certain rate, the sale is made.
Variation Margin
A predefined initial margin requested by a broker in case of fluctuations in the market.
Volatility
It marks the stability of certain currencies and trades.
