The offer of a price where traders can buy the base of a currency pair. This price is higher than current market price and the opposite of the bid price. If the price is 1.25040/45, the ask is the “45” part, which is the price the market will sell to you at (1.25045). You can buy the base currency for 1.24045.
The first currency in a currency pair. In the currency pair GBP/USD, GBP is the base currency.
An analysis of price going down. When a trader is bearish on a pair, they think the market will be heading down. A trader is a bear in the market when placing or holding short positions.
The price where traders can sell the base of a currency pair. It is the opposite of the ask price. It is the price where the market is prepared to buy the currency pair from you at. If you’re looking to sell a pair that shows 1.2040/45, the market is prepared to buy the currency pair from you at 1.2040; which subsequently is the price you’re selling at.
A middleman whose job is to execute buys and sells in the market for their clients (traders).They receive a commission/fee for matching buyers and sellers against each other.
An analysis of price going up. When a trader is bearish on a pair, they think the market will be heading up. A trader is a bull in the market when placing or holding long positions.
Canada’s currency. Nickname: Loonie and CAD for short when paired against another currency.
Two currencies paired against one another to make up an exchange rate. The first pair listed is called the base and the second pair is called the quote. In the currency pair GBP/USD the base is GBP and the quote is USD. When paired, it will show how much the quote currency needs to purchase one unit of the base currency.
Refers to the negative amount your trade is down. By subtracting your balance with your equity, you can see how much drawdown you are in. If your account balance is $100 and your equity is currently $80, you are in drawdown of – $20.
The currency of Japan, abbreviated as JPY when paired to another currency.
An increase to trade with a value far greater than the capital a trader has in their account. If your leverage is 1:50, that means if you have $1000 in your account, you’ll be able to trade as if you had $50,000 in your account ($1000 x $50,000). With greater leverage comes bigger gains AND bigger losses.
A buy position or a bias to be a buyer in the market.
BeginnerEarly Stages for Beginners8 Topics
Forex Terminology11 Topics
- Major and Minor Currency Pairs
- Basic Forex Terminology
- Pips & Ticks
- The Broker & The Spread
- What is a Lot?
- Stop Loss & Take Profit
- Margin & Leverage
- Retracement & Reversal
- When Can I Trade Forex? Sessions - Market Open and Close
- 3 Types of Analysis (Technical, Fundamental, Sentiment)
- 3 Ways a Market Can Go (Up, Down, Sideways)
Margin & Leverage2 Topics
Personal Psychology Questions2 Topics
Psychology for Beginners7 Topics
IntermediateIdentifying Scams2 Topics
Brokers for Beginners5 Topics
Technical Analysis13 Topics
- Types of Charts
- Understanding Japanese Candlesticks
- Candlestick Patterns For Beginners
- Single, Double & Triple Candlestick Patterns
- Support and Resistance
- Confluences w/ Candlesticks & Support & Resistance
- Counter Trend Trading/ Counter Trend Lines
- Moving Average
- Top-Down Analysis
- Consolidation Trading (Breakout, Retest, Continuation)
Market Structure5 Topics
CompletionRisk Management for Beginners8 Topics
Fundamental Analysis9 Topics
AdvancedUsing Indicators6 Topics
Technical Analysis (Part 2)8 Topics
Basic Forex Terminology
If you’re new to this market, the terminology can be quite daunting! It’s imperative to familiarize yourself with the basic terms and definitions; otherwise, you may end up completely lost before you’ve even begun. You might start to believe we’re out here trading bulls, bears, and even ticks!
As we mentioned earlier, currencies are typically quoted together in pairs. You’re essentially assessing which country is stronger in comparison to the other. Now that you know this, let’s run through some definitions that you need to know when trading these pairs!
The first currency in a pair is known as the BASE CURRENCY, while the second currency is called the QUOTE CURRENCY. So if you see the pair EUR/USD, EURO is the Base Currency and the US Dollar is the Quote Currency. You are TRADING based off the BASE CURRENCY.
Example: If you believe that the Euro will rise in comparison to the US dollar, you should buy EUR/USD, as the Euro is the base currency. If you believe the US dollar will rise in comparison to the Euro, you should sell EUR/USD, because you are trading based on the base currency. If the US Dollar rises, that means Euro has to drop, so again, you would sell EUR/USD.
Just as we talked about in the earlier sections, below is how you would read a currency pair quote:
EUR/USD – 1.25650 (1 Euro = 1.25 US Dollars)
GBP/USD – 1.40422 (1 British Pound = 1.40 US Dollars)
USD/CAD – 1.22050 (1 US Dollar = 1.22 Canadian Dollars)