Commonly Used Fx Trade Terms

 

If you have just entered the world of FX trade, then you might be feeling overwhelmed with the amount of information there is to learn about forex trading market. The most important part of learning process is to learn the commonly used FX trade terms. It is important that you start learning process by studying the frequently used FX trading terms online in FX trading because they will serve as the basics and will make the entire learning process comparatively easy by providing you a solid foundation.

 

Some of online FX trading terms used are self-explanatory, whereas some are not. In this article, we provide you brief definitions of some of the common terms used in FX trading. Let us take a look:

 

Spot Deal: This commonly used FX trade term means that when a deal happens between two parties where a certain amount of different currencies is delivered to each other within 2 business days with an exception of Canadian dollar in which transactions needs to be completed within a single business day.

 

Market Orders: Types of order is also among the commonly used FX trade terms. There are various types of orders used in FX market. Let us start with market orders. These are executed to buy or sell the currencies at the current market price. The market orders can be used to either open or close a trade at the prevailing market price.

 

Entry Orders: Entry orders are used to enter the trades at a certain market price different from the current market prices. As soon as the currencies reach the decided rate, the trades get executed.

 

Limit Orders: These orders are executed to buy or sell trades at a certain price. The traders specify the price at which they want to buy or sell a particular pair of currency and the duration for which this order needs to be activated.

 

Stop Orders: Stop orders in forex market are kind of exit orders that are used to close trades, also known as stop loss orders. The aim of using stop orders is to restrict the loss amount suffered by a trade. These orders close the trades at when a specified point of loss is reached.

 

One Order Cancels the Other Orders (OCO): these types of order in FX trade market are executed when a limit order and a stop-loss order are placed at the same point of time.

 

Pip: One of the most commonly used online FX trading terms, it is equal to the last decimal of the exchange rate with the exception of the Japanese Yen where it is the second decimal.

 

Lot: It represents the units of the base currency when you enter just enter the FX trade market.

 

Margin: The minimum amount of money required to trade each lot.

 

Trend: The particular course of direction in which the FX trade market is currently moving in.

 

Long Position and Short Position: These commonly used online FX trading terms are used to explain FX trading market in a long-term buy trend and short-term sell trend respectively.

 

Bid: It is also among the frequently used FX trade terms and it means the currency rate at which you want to purchase or buy currencies at.

 

Offer: The term offer also falls under the common terms used in FX trading and it represents the currency rate you will actually get while purchasing or selling currencies.

 

Spread: Spread in FX trade is equal to the difference between the bid and offer rates.