Basic Forex Terms You Should Know (Part 1)
As a beginner, you may need help with the jargon and technical terms commonly used in the industry. But don't worry; we will cover some basic Forex terms you should know before you start trading. Understanding these terms will not only help you communicate better with other traders but will also give you a better understanding of how the Forex market works. So, whether you're a novice or an experienced trader, read on to brush up on your Forex vocabulary and take the first step towards becoming a successful Forex trader.
Basic Terms
If you are new to forex trading, it is essential to understand the basic terms used in the industry. Here are some of the vital forex terms you should know:
1. Currency Pair
A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. For example, the EUR/USD currency pair represents the euro against the U.S. dollar.
2. Bid Price (Buy)
The bid price is the price at which a forex trader is willing to buy a currency pair. You will see this price on the left-hand side of a currency pair quote.
3. Ask Price (Sell)
The ask price is when a forex trader is willing to sell a currency pair. You will see this price on the right-hand side of a currency pair quote.
4. Spread
The spread is the difference between the bid price and the ask price. It is the cost that you pay to trade a currency pair.
5. Pip
A pip is the smallest unit of price movement in a currency pair. It is "percentage in point" and usually equals 0.0001 for most currency pairs.
Understanding basic Forex terms are essential for any trader who wants to succeed in the Forex market. As a beginner, navigating the numerous terms and vocabularies associated with Forex trading can be overwhelming. However, with time and practice, one can quickly master these terms and use them to their advantage. As with any skill, learning the language of Forex trading takes time and patience. But by understanding these basic terms, traders can gain the confidence to navigate the market successfully and achieve their trading goals.
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