Forex Trading: Terminologies Explained

Forex trading is known by a different number of names. Some refer to it as foreign exchange trading or fx trading. In essence it is the buying and selling one currency against the other.

Day trading is the largest of all capital markets.  day-trading By far the biggest segment of that is forex trading. It is a market that runs 24 hours, meaning that trades happen around the clock.

The usual practice is for brokers to offer trading in the major currency pairs. There are also a number of other brokers that offer exotic currencies

To become a successful forex trader it is essential to understand the terminologies.

First and foremost is the word PIP. It is the minimum price increase rate of a trade. This is usually 0.0001. The price at which a currency can be bought is called the Ask Price and the Bid Price is the price at which it can be sold. The difference between the Ask and Bid prices is called the Spread.

These are a few common terminologies that every prospective forex trader need to know and understand.