Common Terminologies Used in Forex Markets

By
Rahul Pandey
-
132
734
Forex Markets

Forex markets have diverse financial terminologies that have different meanings and purposes. The forex market consists of various terms that are usually shared with other markets but with varying meanings in forex markets. Plus, there is a number of words and terms that are different from Forex.

In this article, we will look at these terms of Forex markets that consist of diverse meanings. These terms are usually used extensively while doing trading in forex markets. 

This term is only used whenever the deviates of Forex markets are traded. However, different currencies consist of diverse lot sizes that are always available. It also provides high flexibility and liquidity for currencies.  

Base and Counter Currencies 

This term is used in stock and bond markets where brokers and investors can sell their security. This shows that they can easily exchange their security for money. Well, anyone can sell and buy various currencies to others in forex markets. This also shows that anyone can exchange their currency into another currency simultaneously. 

Also, in many cases, the forex traders decided to roll over their derivative contracts. This shows that they settled down their derivative contracts to the next date. These are known as rollovers. 

This is the reason why currency prices are quoted and used in pairs. The price is always stated in terms of first currency; it is known as base or base currency. On the other hand, the other currency that comes in a pair is the counter currency.  

Bid, Ask and Spread 

Forex markets are running due to forex markets. They are providing a two-way market to all of the currencies at all times. That is why they are providing us with quotes like buying and selling. You can get your own quotes here: www.tradefx.co.za/review/trade-nation/.  

The willing to buy price is known as bid or bid price, whereas the ready to sell price is known as ask or ask price. The basic difference in terms is known as the bid-ask spread, or known as “spread.” 

Lots 

This term is only used whenever the deviates of Forex markets are traded. However, different currencies consist of diverse lot sizes that are always available. It also provides high flexibility and liquidity for currencies.  

Pip 

The minimum required amount for moving a currency quote is known as pip. The most common pip is referred to as 1/10000 of the currency that was being quoted. That presents a change in the currency for being affected on the prices quoted in forex markets. Pip has transformed itself as lingo in forex trading. Changing profits and prices in forex markets are referred to as pips.  

Value Dates and Rollovers 

Value date shows its meaning and purpose independently. The value date was the exact date when forex parties agreed to settle down their accounts. This also clears one thing all of the open positions are contracts are closed on this value date but in an automatic process. This makes the arrangements more flexible and volatile when closer to the value date.  

In this article, we will look at these terms of Forex markets that consist of diverse meanings. These terms are usually used extensively while doing trading in forex markets. 

Also, in many cases, the forex traders decided to roll over their derivative contracts. This shows that they settled down their derivative contracts to the next date. These are known as rollovers.  

Conclusion 

The forex market consists of various terms that are usually shared with other markets but with varying meanings in forex markets. Plus, there is a number of words and terms that are different from Forex.

These are a few commonly used terms that are used in forex markets. These terms also refer to various strategies. In conclusion, we can summarize that forex trading consists of its jargon and unique vocabulary. 

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