Forex Terms That You Must Know
Published Saturday, August 16, 2008 by bloggerblognet83460 | E-mail this post
Do you want to trade in the Forex market? Before you learn to use any forex trading software, and before you consider the best times of the day to trade the forex, there are the several terms that you must know. Here are the vital forex trading terms:
Currency Pairs: Every forex trade incorporates two currencies, one that you are purchasing, and one that you are selling.
Major and Minor Currencies: The major currencies are the following: United States Dollar (USD); European Euro (EUR); Great Britain Pound (GBP); Japanese Yen (JPY); Australian Dollar (AUD); Swiss Franc (CHF); Canadian Dollar (CAD).
Base Currency: The Base Currency is the first one indicated in the trade pair. The base currency is compared against the secondary currency. For example, a EUR/USD = 1.33300 means that 1 Euro (EUR) is worth 1.33300 United States Dollars (USD).
Quote Currency: This is the second currency mentioned in the currency trade. The amount of money that you make or lose is calculated from this currency.
Cross Currency: This is a trade in which neither of the two currencies involved is the US Dollar (USD). These trades actually involve the buying and selling of two different currency pairs. All currency trades include the US Dollar. Here is an illustration of this point: if you are to trade the EUR/JPY pair, you are actually buying a EUR/USD pair and at the same time you are selling a JPY/USD pair. These trades typically typically have higher commissions as they involve two trades.
Pips: Pips are the smallest price for any currency. The pip represents the change in the fourth decimal place.
If you want to trade in the forex market, get to know these six terms.
Lane shows people about Forex Trading by writing articles about Forex Trading Strategies and many other topics.
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