The forex market is undoubtedly the largest financial market operating on the face of the earth. Millions of people either lose or gain huge profits in a matter of few minutes. So, it takes the highest level of professionalism and experience to execute trades for maximum returns. Having full knowledge about the terms and phrases used in the Forex market is crucial to scoring success in the forex trading world. Keeping this in mind, we have put together some important terms and words you should be aware of before you try your luck in the forex industry. Let’s have a look at them:
Forex is traded in fiat currency pairs: one currency is sold, while the other one is bought, and together they determine the exchange rate.
The currency coming first in a currency pair is known as the base currency. For example, in GBPUSD the GBP serves as the currency.
An exchange rate or forex rate between two fiat currencies is the rate at which one country’s currency will be exchanged for another currency. It is also known as the value of one state’s currency in terms of other currency.
The second currency in the currency pair is known as the quote currency. For example, in GBPUSD the USD is the quote currency.
A long position is the purchase of an asset, with an expectation that its value is set to fly.
A short position is the sale of an asset, with an expectation that its market value is set to drop.
An opening price is significantly below or above the last day’s close price. It means that stop or limit orders can be filled at a price different from the preferred order price.