I have written an article about forex terms with the similar title, in which I explained some of the most commonly-used forex terms for forex beginners such as leverage, pip, margin etc. however, there is no end to forex learning; understanding more forex terms is vital to forex so I will explain some most-commonly used forex terms further for the reference to forex beginners.
Lot: the standard size of a transaction; one standard lot is equal to 100,000 units of the base currency, or 10,000 units if it is in a mini account and 1,000 units in a micro account.
Position: The amount of currency owed by an investor. The position can be flat or square, long or short.
Long position: When a forex trader buys a currency of a particular country, assuming that the price will increase and he will sell it off later, then it is said that he is in a ‘long’ position. The trader aims to make profits by the rising price of the currency.
Short position: if a forex trader sells a particular currency because he fears that the price of that currency may go down; then it is said that he is in ‘short’ position. When a trader is in short position he earns profits when the market declines.
Spread: The trader buys the currency at a particular price and then sells it at a different price. The difference between the purchase price and the selling price is called spread.
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