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Forex View

Forex refers to the global decentralized market where currencies are traded in currency pairs such as EUR/USD. The base currency is listed first and is usually the currency being bought or sold, while the quote currency is listed second and is the currency in which the base currency is quoted. Traders can buy the base currency at the bid price or sell it at the ask price, with the spread representing the difference between these prices and how brokers make money. Other key forex concepts include lots, margin, leverage, stop losses, take profits, long and short positions, margin calls, liquidity, volatility, and fundamental and technical analysis.

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48 views2 pages

Forex View

Forex refers to the global decentralized market where currencies are traded in currency pairs such as EUR/USD. The base currency is listed first and is usually the currency being bought or sold, while the quote currency is listed second and is the currency in which the base currency is quoted. Traders can buy the base currency at the bid price or sell it at the ask price, with the spread representing the difference between these prices and how brokers make money. Other key forex concepts include lots, margin, leverage, stop losses, take profits, long and short positions, margin calls, liquidity, volatility, and fundamental and technical analysis.

Uploaded by

Sabelo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.

Forex: Short for foreign exchange, it refers to the global decentralized market where currencies
are traded.

2. Currency pair: Two different currencies that are being traded against each other. For example,
EUR/USD represents the Euro against the US Dollar.

3. Base currency: The first currency listed in a currency pair. It is usually the currency being bought
or sold.

4. Quote currency: The second currency listed in a currency pair. It is the currency in which the
base currency is quoted.

5. Bid price: The price at which a trader can sell the base currency.

6. Ask price: The price at which a trader can buy the base currency.

7. Spread: The difference between the bid and ask price. It represents the cost of trading and is
how brokers make money.

8. Pip: The smallest unit of price movement in a currency pair. It represents the fourth decimal
place for most currency pairs.

9. Lot: A standardized trading size in forex. A standard lot is equal to 100,000 units of the base
currency, while a mini lot is 10,000 units and a micro lot is 1,000 units.

10. Margin: The amount of money required to open and maintain a trade. It is a portion of the total
trade size.
11. Leverage: The use of borrowed capital to increase the potential return of an investment. In forex
trading, it allows traders to control a larger position with a smaller amount of capital.

12. Stop loss: A predefined order used to limit potential losses by closing a trade at a specified price.
It helps protect against excessive losses.

13. Take profit: A predefined order used to automatically close a trade and secure profits at a
specific price level.

14. Long position: Buying a currency pair with the expectation that its value will rise.

15. Short position: Selling a currency pair with the expectation that its value will decrease.

16. Margin call: A demand from a broker for additional funds to cover losses in a trading account. It
occurs when the account’s equity falls below the required margin level.

17. Liquidity: The ability to buy or sell an asset quickly and at a stable price. Forex markets are highly
liquid due to the large volume of daily transactions.

18. Volatility: The measure of price fluctuation over a period of time. High volatility can present
both opportunities and risks for traders.

19. Fundamental analysis: The evaluation of economic, political, and social factors that can influence
the value of currencies.

20. Technical analysis: The analysis of historical price and volume data using charts, patterns, and
indicators to predict future price movements.

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