Before we start the world's trading , we should understand and learn the terms that are often used in forex trading . This term is absolute for you to understand , even though you think is not so important . In breaking down some of the terms in forex , will be divided into sections that are easy to understand for beginners .
The following terms in Forex Trading
- Broker : Only provide the services and facilities of trading , which brings between Buyers and Sellers to transact Sell - Buy , as well as helping or Profit and Loss reporting of your transaction . By trading on the reliable Forex broker , security funding would be secured .
The following terms in Forex Trading
- Broker : Only provide the services and facilities of trading , which brings between Buyers and Sellers to transact Sell - Buy , as well as helping or Profit and Loss reporting of your transaction . By trading on the reliable Forex broker , security funding would be secured .
Note : Do not just chase big bonus of the Forex Brokers , Fund safety is the most important thing .
- Pip : A pip is the smallest unit of movement of a currency pair which is commonly referred to as " points" . For example : EUR / USD 1.4113 last week and today's value rose to 1.4125 it means this pair increased by 12 Pips / Point .
- Leverage : This is more or less synonymous with " margin deposit" on the stock . Simply put , if we were to invest $ 500 then if the unit is subject to 1:100 leverage means that we are given the right by the broker to buy 100 x greater than the funds we have . This means that we can increase the quantity of the lot and used our margins shrink , while we are more available margin . Means the sum of $ 500 , we are given money to buy foreign currency equivalent of $ 50,000 . Now this is called the collateral margin or leverage . Each broker has a varying leverage . In this case , leverage means greater possibility of profit / loss becomes larger . Vice versa , a small leverage the losses that may occur with consequent smaller profit also becomes smaller . I myself prefer a little leverage because then the risk of loss is smaller . If I believe a deal will be profitable because there is a very strong analysis so I can raise my number of lots that will be traded .
- Contract Size : This is the amount of time factor in the calculation of profit and loss . Its value is fixed and predetermined .
- Lot : Lot is a unit of the contract on each transaction . When I trade , for example, buying EUR / USD then the value of the units in the lot .
- Margin Call : Margin Call can occur when the available margin is not sufficient anymore to sustain Loss floating , so the position will be automatically locked by the system . Margin Call is arguably a kind of Nightmare for traders , although some are thought can not be called a true and experienced traders that have never felt the margin call .
- Pair : In forex trading is known pair ( pair ) , the currency , for example EUR / USD , GBP / USD , USD / JPY , etc. . If I do buy / long , the currency pair EUR / USD , then I 'm actually buying the EUR and selling the USD . Likewise, the opposite applies . That is why in forex trading is not like buying and selling of goods . We do not have to have a currency pair to trade , we only need to do contract buy / sell the collateral margin .
- Take Profit : facilities order to automatically liquidate a position at a certain price when a trader has acquired a number of profit .
- Stop Loss : facilities order to automatically liquidate a position at a certain price to limit losses that might occur even worse if the market moves in the opposite direction or position trader may also serve to protect the profits that have been obtained , but the market experienced Rebounce .
- Trailing Stop : facilities provided through MetaTrader Forex Brokers , which can change the stop loss to lock in profits automatically in certain multiples . Trailing Stop is the development of a Stop Loss . Trailing Stop will function when the order has been getting more profit than a certain minimum value which has been determined by the broker ( eg minimum 200 pips / points ) . This facility is a local server . So when metatrader disabled Traling stop it will not work .
Those are some basic terms contained in the Forex Trading you need to understand before jumping into the Forex World .
- Pip : A pip is the smallest unit of movement of a currency pair which is commonly referred to as " points" . For example : EUR / USD 1.4113 last week and today's value rose to 1.4125 it means this pair increased by 12 Pips / Point .
- Leverage : This is more or less synonymous with " margin deposit" on the stock . Simply put , if we were to invest $ 500 then if the unit is subject to 1:100 leverage means that we are given the right by the broker to buy 100 x greater than the funds we have . This means that we can increase the quantity of the lot and used our margins shrink , while we are more available margin . Means the sum of $ 500 , we are given money to buy foreign currency equivalent of $ 50,000 . Now this is called the collateral margin or leverage . Each broker has a varying leverage . In this case , leverage means greater possibility of profit / loss becomes larger . Vice versa , a small leverage the losses that may occur with consequent smaller profit also becomes smaller . I myself prefer a little leverage because then the risk of loss is smaller . If I believe a deal will be profitable because there is a very strong analysis so I can raise my number of lots that will be traded .
- Contract Size : This is the amount of time factor in the calculation of profit and loss . Its value is fixed and predetermined .
- Lot : Lot is a unit of the contract on each transaction . When I trade , for example, buying EUR / USD then the value of the units in the lot .
- Margin Call : Margin Call can occur when the available margin is not sufficient anymore to sustain Loss floating , so the position will be automatically locked by the system . Margin Call is arguably a kind of Nightmare for traders , although some are thought can not be called a true and experienced traders that have never felt the margin call .
- Pair : In forex trading is known pair ( pair ) , the currency , for example EUR / USD , GBP / USD , USD / JPY , etc. . If I do buy / long , the currency pair EUR / USD , then I 'm actually buying the EUR and selling the USD . Likewise, the opposite applies . That is why in forex trading is not like buying and selling of goods . We do not have to have a currency pair to trade , we only need to do contract buy / sell the collateral margin .
- Take Profit : facilities order to automatically liquidate a position at a certain price when a trader has acquired a number of profit .
- Stop Loss : facilities order to automatically liquidate a position at a certain price to limit losses that might occur even worse if the market moves in the opposite direction or position trader may also serve to protect the profits that have been obtained , but the market experienced Rebounce .
- Trailing Stop : facilities provided through MetaTrader Forex Brokers , which can change the stop loss to lock in profits automatically in certain multiples . Trailing Stop is the development of a Stop Loss . Trailing Stop will function when the order has been getting more profit than a certain minimum value which has been determined by the broker ( eg minimum 200 pips / points ) . This facility is a local server . So when metatrader disabled Traling stop it will not work .
Those are some basic terms contained in the Forex Trading you need to understand before jumping into the Forex World .
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Forex is not something to fear, but fear when you are not able to control yourself in the forex or whatever. When profit in forex it becomes your personal responsibility, and when you lose in forex it also becomes your personal responsibility. Forex simply as a facility to achieve financial freedom, no more no less. Forex is a place to think realistically.
Being successful in forex, it means you are committed to establish a disciplined and thoughtful character. Forex may be the best mirror of your true character. Forex is just forex.
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