Forex Holic: Forex Dictionary

<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-5nem1-ZT2VvVy_Q6mdY8mw8pZakDLN-16mg5JvjJpsULIxdXNhAWkAf9zJ9lQD2HmBP_2zKuK-TkufCiJuVtcqv0DdoUi2aja7TYvE7Jtu-6WYGGlm96oHWe-IrHlcUF8QasAwRuFre0/s1600/analisforex.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="155" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-5nem1-ZT2VvVy_Q6mdY8mw8pZakDLN-16mg5JvjJpsULIxdXNhAWkAf9zJ9lQD2HmBP_2zKuK-TkufCiJuVtcqv0DdoUi2aja7TYvE7Jtu-6WYGGlm96oHWe-IrHlcUF8QasAwRuFre0/s1600/analisforex.jpg" width="320" /></a></div>
<div style="background: white; line-height: 150%; margin-bottom: 15.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 7.5pt; text-align: justify;">
<span style="background-color: transparent; font-family: 'Times New Roman', serif; font-size: 12pt; line-height: 150%;"><b>Forexolic  - </b>Just
as in learning something new, you often hear the term you've never heard of
before, similarly in learning trading. As a novice trader in the forex
business, before starting to trade, you should completely understand the
following terms, which are often used in the forex world.</span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Major
and Minor Currencies. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">There are eight of the most common currencies traded
(USD, EUR, JPY, GBP, CHF, CAD, NZD and AUD), which the United Kingdom is known
by the term ' major currencies ' or ' the majors '. This currency is a currency
that has a very high liquidity. As for the currencies that are included in this
group are not known by the term ' minor currencies '.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The
Base Currency. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The Base currency (or currencies basis) is the first
currency listed in the currency pair. In the writing of currency pairs, we can
know how much the value of the base currency is the currency compared with the
second. For example: a currency pair USD/CHF showed price 1.6350, meaning that
one has a value equivalent to USD 1.6350 CHF.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The
Quote Currency. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Terms of the quote currency in the United Kingdom is
used to refer to the second currency in a currency pair, or that is often known
as the ' pip ' currency.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Pip.
<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Pip is the smallest price unit in the currency. Almost
all currencies in writing using the five numbers, and generally consists of a
decimal number after the first numbers, for example EUR/USD exchange rate has
1.2538. In this case, one pip is equal to the smallest changes the value of a
decimal number is a decimal number to the last-four, i.e. 0.0001. So, when '
the quote currency (currency) in a currency pair is USD, then the one pip is
equal to 1/100 cent.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Pipette.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Pipette is
equivalent to a tenth of a pip. Some brokers are quoting exchange rates of
currency pairs with the use of fractional pip (fractional pips – language of
the United Kingdom). For example, if EUR/UDS 1.32156 to move from 1.32158, is
said to be going on a price increase of 2 pipette.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The
Bid Price.</span></b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"> <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The Bid price is the price at which the market is
willing to buy a currency pair in forex market. At this price, you can sell the
base currency (base currency). This price is printed on the left side of the
writing of the exchange rate of the currency pair. Example: in the quote
GBP/USD 1.8812/15, bid price is 1.8812. That means you can sell one British
pound for $ 1.8812 US dollars.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Ask/Offer
Price. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Ask/offer price is the price at which the market is
willing to sell a certain currency pairs in the forex market. At this price,
you can buy the base currency. This price is printed on the right side of the
writing of the exchange rate of the currency pair. Example: in the quote
EUR/USD 1.2812/15, ask price is 1.2815. That means you can buy one euro 1.2815
u.s. dollars worth.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Bid/Ask
Spread.<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"> Bid/ask spread
is the difference between the sale price and the purchase price. Forex brokers
often do not include some of the leading figures in quote currency pairs. For
example, the USD/JPY exchange rate has indeed 96/118.34, but quoted verbally
without leading three digits, so it's only mentioned "30/34″. In this
case, the USD/JPY has a spread of 4 pips increments.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The
Way Of Writing The Exchange Rate. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">The exchange rates of currencies in the forex market
in general are listed using the format as follows: Base currency/Quote currency
= Bid/Ask.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Transaction
Cost. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Transaction cost (or transaction costs) is often
manifested in the buy/sell price difference (bid/ask spread) in one round of deals.
One round of the transaction contains the notion of buying (or selling) closed
with a sale (or purchase) for the same number of units of a currency pair. For
example, the EUR/USD exchange rate has for $ 1.2812/15, this means the cost of
this transaction is 3 pips.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Dictionary For You<o:p></o:p></span></div>
<div style="background: white; line-height: 150%; margin-bottom: 15.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 7.5pt; text-align: justify;">
Spread  = Ask Price – Bid Price<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 150%;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Cross
Currency. <o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Cross currency is a currency pair that does not
contain the US dollar. This currency pair is often showed a pattern of erratic
movements, because traders basically do two transactions involving u.s.
dollars. For example, when we make deals to buy (long) EUR/GBP, essentially the
same as buy sell EUR/USD and GBP/USD. Often a transaction involving cross
currency has a higher transaction costs.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Margin.
<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">When you open a margin account (or margin account) in
one of the forex broker, you must deposit a certain minimal amounts of money.
Minimum amount varies from one broker to another broker. Every time you make a
transaction, a few percent of the total value of your account will on isolateis
used as the initial margin required for new transactions based on currency pair
being traded, the price at the time, and the number of units (or a lot) in the
transaction. Number of lots always refers to the base currency.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<b><span lang="EN-US" style="font-family: "Times New Roman","serif"; font-size: 12.0pt; line-height: 150%; mso-ansi-language: EN-US;">Leverage.
<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span style="font-family: 'Times New Roman', serif; font-size: 12pt; line-height: 150%;">Leverage is a comparison of the amount of capital that
is used in a single transaction against the margin (security deposit is
required). Leverage allows traders to control large amounts of money just by
using relatively much less. This leverage factor varies between one broker with
other brokers, ranging from 2: 1 to 1: 500.</span></div>

Terms In Forex

Forexolic - Just as in learning something new, you often hear the term you've never heard of before, similarly in learning trading....

Forex Holic

Terms In Forex

Popular Posts

Blog Archive