Forex Dictionary | PIP-ACADEMY

Terminologies

Ask

Ask price is the lowest price the broker will pay to sell the instrument.

 

Bid 

Bid price is the highest price the broker will pay to purchase the instrument.

 

Capital

Account Balance. 

Entry Price

Price at which your order (buy/sell) is executed.

 

Exchange rate 

An exchange rate is simply the ratio of one currency valued against another currency. To put it differently, an exchange rate is a price paid for one currency in exchange for another. 

 

Fluctuation 

The rise or fall in exchange rate within a short-term period; may be slight or dramatic depending on market and other conditions.

Fundamental Analysis

Fundamental analysis is an analysis methodology for forecasting the direction of the prices by relying on the economic, social, political and other qualitative and quantitative factors that may affect the supply and demand in the market.

 

Leverage 

Borrowing Capital from your broker to open bigger positions than you would otherwise be able to.

 

Liquidation 

Forcible closure of your position. 

 

Limit Entry Order

A limit entry is an order placed to either buy below the market price or sell above the market price. A sell limit is filled at a specified price or higher and a buy limit is filled at specified price or lower.

 

Lot

Lot is the measurement for the units of currency you buy and sell. 

A standard lot represents 100,000 units of any currency, whereas a mini-lot represents 10,000 and a micro-lot represents 1,000 units of any currency. 

 

Market Order

A market order is a type of order that you want to enter the market at the current price or the best available price.

Pip 

A pip is a standardised unit and is the smallest amount by which a currency quote can change. It is usually 0.0001 for U.S.-dollar related currency pairs, and 0.01 for Japanese yen related currency pairs

Pipette

A pipette equals 1/10 (one tenth) of a pip and it represents a fraction of 1/100,000 (one in hundred thousand).

Position Size 

Number of contracts/units/Lots of an instrument you buy or sell.

 

Spread

The difference between the Ask price and Bid price is broker’s profit that is called spread. 

Slippage 

In forex, slippage occurs when an order is executed, often without a limit order, or a stop loss occurs at a less favorable rate than originally set in the order. Slippage is more likely to occur when volatility is high, perhaps due to news events, resulting in an order being impossible to execute at the desired price.

 

Swap 

A forex swap rate is defined as an overnight or rollover interest (that is earned or paid) for holding positions overnight in foreign exchange trading. A swap charge is determined based on the interest rates of the countries involved in each currency pair and whether the position is short or long. In any one currency pair, the interest is paid on the currency sold and received on the currency bought.

 

Stop-loss 

Stop loss order (SL) is classified as exit order. Once triggered, it closes your trade at the pre set stop price level known as SL order to control the losses. 

Stop Entry Order

A stop entry order is an order placed to buy above the market price or sell below the market price.This simply means that you only enter the trade if the market moves in your favour.

Spot Price

Current market price.

 

Technical Indicators

Forex Technical Analysis Indicators are usually used to forecast price changes on the currency market, they are useful tools to assist in the prediction of market movement. 

Technical Analysis

Technical analysis is an analysis methodology for forecasting the direction of prices by relying on the historical price data, primarily price and volume.

 

Trailing Stop Loss

A stop-loss trade order that is not fixed and trails at a predefined pip amount with the floating price.

Take profit

A take-profit order (T/P) is a type of limit order that specifies the exact price at which to close out an open position for a profit. 

 

Triggered Price

The price that an order is activated at. 

Volatility

In the Forex market volatility is often associated with big swings in either direction. For example, when the price rises and falls more than one percent over a sustained period of time, it is called a 'volatile' market. 

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Risk Warning: : Trading Contracts for Difference (CFDs) on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade Contracts for Difference (CFDs), you should carefully consider your trading objectives, level of experience and risk appetite. It is possible for you to sustain losses that exceed your invested capital and therefore you should not deposit money that you cannot afford to lose. Please ensure you fully understand the risks and take appropriate care to manage your risk.

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