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Forex Technical Glossary: Basic Forex Trading Guide(Part 4)

In our guide we have already dealt with important technical issues, but sometimes you have to step back, because mastering an instrument means first knowing the true and pure meaning of technical terms.

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The Terminology is very important and it is too often taken for granted.

We will try to list the main terms that are used in trading binary options and forex.

A
Ask The price at which the broker sells the currency pair and the price that trader pays when he buys a currency pair.
Aussie Slang name given to Australian dollar (AUD).

B
Base Currency It is the first currency that makes up a currency pair, the one that remains constant (eg. If the pair is EUR / USD the “base currency” is the Euro).

It is the dominant base Currency. As a result, foreign exchange rates against the Euro will be identified as EUR / USD, EUR / GBP, EUR / CHF, EUR / JPY, EUR / CAD, etc. The British pound is the next base currency used in the hierarchy. The major pairs against the GBP are identified as GBP / USD, GBP / CHF, GBP / JPY, GBP / CAD.
Balance of Payments The registration of all the transitions between a country and the rest of the world; It includes information on the value of trade in goods and services and on the value of the transfers.
Bear Market Market where prices fall rapidly, due to the general pessimism.
Bid The price at which the broker buys the currency pair and it is the price got by the trader when he sells a currency pair.
Break Even Point (BEP) Units of time or volume of production at which the profit derived from an investment equals the costs.
Broker It is an operator or a financial intermediary. A broker is a person or a company that handles customer orders for the purchase or selling of a currency. To do so, he applies a fee for the service provided (commission).
Bull Market Market where prices rise rapidly, due to the general optimism.

C
Cable Slang name given to GBP / USD.
Call Rate Interbank interest rate from day to day.
Cash Flow Money generated by a company in a given period of time; available for new investments or compensate invested capital.
Cash Market Market for immediate purchases and selling of currencies.
Central Bank It is the main monetary authorities of each country, controlled by the central government. It is responsible for the issuance of the currency, monetary policy, interest rates and the regulation and supervision of the banking private sector. The Federal Reserve (Fed) is the central bank of the United States. In Europe there is the European Central Bank (ECB) and in Japan there is the Bank of Japan (BOJ).
Cross Rate The exchange rates between two currencies generally obtained from the exchange rates of individual interest of two currencies measured by the US dollar.
Currency Pair It is normally expressed as a 5-digit number, with 4 decimal places.

When the EUR / USD is quoted at 1,5000, 1,5000 means that it takes the quote currency (USD) to buy one unit of the base currency.
Currency Risk Risk of suffering losses in case of change in exchange rates.
Currency Swap Contract by which two parties agree to exchange two series of payments, denominated in two different currencies, in order to meet coverage requirements opposing the risk of changes in exchange rates.

D
Day Trading It refers to transactions that were initiated and closed on the same Forex days. Forex day does not coincide with the calendar day.
Deflation General decrease in price levels, which is a negative inflation.
Demo Account Trading account that simulates market conditions using virtual money.
Devaluation Decrease of the vale of a currency compared to the value of another currency. When a country devalues its currency, the goods that are imported become more expensive, while the goods that are exported are less expensive and thus more competitive.
Dumping The sale of goods by foreign companies at a price below the unit cost, or lower than the price applied in the country to which the company belong.

E
EMS Abbreviation for European Monetary Systems: the agreement among the European Union member countries to maintain the alignment among the exchange rates of their respective currencies.

F
Federal Reserve United States Central Bank.
Fiber Name used by traders to define the euro (EUR).
Fixed Exchange Rate Official rate set by monetary authorities for one or more currencies.
Flat/Square Position of equilibrium. A book is balanced if a negotiation does not have any positions or all positions are canceled with one other.
Foreign Exchange Swap Changes in exchange rates. Transaction which involves the actual exchange of two specific dates between two currencies (main) — a date with the rates determined at the conclusion of the contract (“short leg”) and a date long term with a fixed rate at the time the contract is signed.
Forex (FX) Market where the purchase of a currency is carried out simultaneously with the sale of another currency. The majority of FX transactions are calculated in reference to the US dollar.
Forex day It starts with the opening of Sydney stock market (Australia – 8:00 local time in Sydney) and ends with the closing of New York stock market (United States – 17:00 local time in New York).  Since the closing time of New York stock market coincides with the opening time in Sidney, Forex trading works from Sunday to Friday without interruption.
Fundamental Analysis Macroeconomic and trade data analyses that is designed to determine the future evolution of financial markets.

G
GTC – Valid until revoked Order to a counterpart to buy or sell at a fixed price. This order is valid until the moment it is not canceled by the client.

H
Hedge Funds Private investment fund, intended for investors who have large capital (generally the minimum investment is $1 million) and specialized in short-term high-risk speculations. Hedge funds operate on bonds, currencies, stock options and derivatives.
Hedging Practice that consists in engaging in investment activity in order to cover the losses of another investment, for example by selling to offset a previous purchase. Although hedges reduce potential losses, they also tend to limit the potential profits.
High/Low Normally, the negotiated price higher or lower for the underlying asset during the current session.
Holding Company that owns and manages investments in other companies for the purpose of monitoring their activities or to realize gains.

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The post Forex Technical Glossary: Basic Forex Trading Guide(Part 4) appeared first on Soloforex.



This post first appeared on Stock Market News And Financial Industry Updates, please read the originial post: here

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