The Currency Pair describes the value of a base currency, which is determined by comparing it to a secondary currency.
The Base Currency is the currency against which the other currencies are quoted. One unit of the Base Currency is equal to X units of the secondary currency. If the EUR/USD currency pair stands at 1.3300, the Euro is the base currency. In order to get/buy 1 Euro, the trader will pay USD 1.3300.
The Bid Rate is the number of units of a secondary currency that a market-maker would pay for the sale of a unit of the base currency. The Bid Rate is also referred to as the Selling Rate, as it is the selling price of the base currency.
The Ask Rate is the quantity of units of a secondary currency that a market-maker is asking for, to pay for a unit of the base currency. This is the buying price of the base currency.
The Bid/Ask Spread is the difference between the buying price of a currency (the 'Ask' price) and the selling price (the 'Bid' price). The Bid will always be smaller than the Ask price.
The High/Low is the highest traded price and the lowest traded price of the commodity or currency that over the period of a trading day.
A pip is the smallest increment by which a currency can move and corresponds to the fourth decimal point, or 1 hundredth of one percent. A EUR/USD move from 1.3300 to 1.3302, therefore would be a move of 2 'pips'.
The Spread is the difference between the buying price of a currency (the 'Ask' price) and its selling price (the 'Bid' price).
A Stop Loss order allows traders to set an exit point for a losing trade when they define their risk and offset their trade accordingly.
Leverage involves executing a transaction with a sum of money that is larger than the actual sum used. This enables a larger return and increases the risk accordingly. At 100:1 leverage, therefore, a trader could use $100 in order to take a $10,000 position.
The Offer is the price, or rate, at which a willing seller is prepared to sell. This word is used interchangeably with the term "Ask".
A Take Profit is an order placed by the trader to ensure that the trade is automatically closed at a certain pre-defined profit level.
What is Forex
Forex (Foreign Exchange) is the biggest financial market worldwide. Forex offers income to millions of traders and large banks worldwide, with an estimated 4 trillion U.S dollars in currencies traded on daily basis.
It is the system by which currencies are appreciated relative to one another, and traded. An individual or organization buys one currency and sells another in a real-time procedure. Currency trading constantly takes place in pairs where one currency is exchanged for another. The price of a currency is an indication of the state of that country's wealth with respect to other main economies. A trader can receive profit by buying or selling the currency.
Trading in Forex market is operated 24 hour a day, 5 days a week in a network of central banks across all continents. Since the markets are decentralized, MXTrade has the following trading hours:
Forex Trading Hours
||6:00 PM 3:00 AM
||10:00 PM 7:00 AM
||7:00 PM 4:00 AM
||11:00 PM 8:00 AM
||3:00 AM 12:00 PM
||7:00 AM 4:00 PM
|New York Open/Close
||8:00 AM 5:00 PM
||12:00 PM 9:00 PM