Forex Acronyms and Jargon
Below Table shows all Forex Acronyms and Jargon,
Acronyms and Jargon |
Definition |
| Bid | Is the Current Highest Bid Price the Market willing pay for ,to buy from you. So when you are Selling you are either selling at or below the Bid Price |
| Ask | Is the Lowest Current Price Market willing to Sell to you. So when you are buying you are either buying at or above the Ask Price |
| Spread | Spread = Bid -Ask
Difference between the Highest Price the Buyer Willing to Pay for vs the lowest Price that a Seller willing to accept
|
| Base Currency | The base currency will appear first, and will be followed by the second currency, known as the quote |
| Quote Currency | This is the Second Currency Appeared, price displayed on a chart will always be the quote currency |
| Pips | 4 Digit Decimal
0.0001 Smallest amount of a currency quote can change. |
| Pippette | 5 Digit Decimal
0.00001 |
| Lot | 1 Standard Lot is equal to 100,000 Unit Base Currency
0.1 Lot ( Also Known as Minimum Lot) is equal to 10,000 Unit Base Currency 0.01 Lot ( Also known as Micro Lot ) is equal to 1000 Unit Base Currency |
| Leverage & Margin | Let say you are trading EURUSD Pair
Conversion Price EURUSD: 1.1973 Trade Size : 100,000 Unit Total Trade Value : 1.1973 x 100,000 = USD 119,730 Broker Offered Leverage :1:50 Broker Leverage convert to Percentage : ([1/50] x 100 ) = 2% For You To Open a Position ( Margin Needed) = (2/100) x USD 119,730 = USD 2394.60 Broker will Lend you = (98/100) x USD 119,730.40 -= USD 117,335.40
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| Equity |
Equity = Balance of your Account + (Unrealized Profit / Loss)+ Open Margin |
| Free Margin | Free Margin is the money in a trading account that is available for trading
Let Use back the Example on top EURUSD Pair Conversion Price EURUSD: 1.1973 Trade Size : 100,000 Unit Total Trade Value : 1.1973 x 100,000 = USD 119,730 Margin to Open Position = (2%) USD 2394.60 Value Per Pip = USD 10 Balance of your Account = USD 5000 Equity = Balance of your Account + (Unrealized Profit / Loss)+ Open Margin Example 1 :Market Going Up from EURUSD: 1.1973 to 1.1975 Equity =USD 5000+ ([1.1975 -1.1973] x USD 10 ) + USD 2394.60 Equity = USD 7414.60 Free Margin = Equity – Margin = USD 7414.60 – USD 2394.60 = USD 5020 Example 2 :Market Going Down from EURUSD: 1.1973 to 1.1971 Equity =USD 5000+ ([1.1971 -1.1973] x USD 10 ) + USD 2394.60 Equity = USD 7374.60 Free Margin = Equity – Margin = USD 7374.60 – USD 2394.60 = USD 4980
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| Margin Call | The Margin Call Event normally Occur before Stop out .Is a Warning Call or Wake Up Call from Broker notifying you that your free Margin is Depleting and getting very near to your Margin Level .
Margin Call Level can be Set before the Stop Out Level or Same level as the Stop Out. The Terms Varies By Broker |
| Stop Out | Free Margin become 0 . Your Broker will automatically close your Position and return you your Margin |
| Buy Stop (Pending Order) | A Condition Set , when the Price cross your Set Value , the System will turn it into a Buy Order
Example EURUSD: 1.1973 Set Value : EURUSD: 1.1975 When the Price Cross your Set Value 1.1975 , the System will trigger a Buy Order |
| Sell Stop (Pending Order) | A Condition Set , when the Price cross your Set Value , the System will turn it into a Sell Order
Example EURUSD: 1.1973 Set Value : EURUSD: 1.1975 When the Price Cross your Set Value 1.1975 , the System will trigger a Sell Order |
| Buy Limit | You Anticipate the Price will dip initially , and then retrace back to an Uptrend.
Buy Limit is Set below the Current Market Price. Example EURUSD: 1.1973 Set Value : EURUSD: 1.1970 When the Price Cross your Set Value 1.1970 , the System will trigger a Buy Order |
| Sell Limit | You Anticipate the Price will Up initially , and then retrace back to a down trend.
Sell Limit is Set above the Current Market Price. Example EURUSD: 1.1973 Set Value : EURUSD: 1.1976 When the Price Cross your Set Value 1.1976 , the System will trigger a Sell Order |
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