Importance Of Forex Lingo: Know And Impress Your Date

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Regarding forex, the right lingo can go a long way. If you are trying to make a good impression on your first date, you can show off your knowledge and can fluently discuss the industry.

It is a new skill that anyone can learn. You are required to learn lingo specifically if you are looking forward to winning your love’s heart. If you are a newbie, you must know certain terms like the back of your hand before your first date.

Learning lingo helps impress and lets you gain confidence with key concepts like pips, trading strategies, leverages, and order execution to start your journey. For instance, xauusd indicates the abbreviation between the gold vs USD currency pair.

In this article, you will discover some of the basic Forex lingo that will help you sound like a pro.

List Of Forex Lingo You Need To Know 

Here is a list of Forex lingo that will help you impress your first date.

1. Pip 

A pip is the smallest price unit for any currency in forex trading.

However, a pip is typically equal to 0.0001 of a currency.

Nearly every currency pair comprises five significant digits, and the pairs have decimal points after the first digit. Thus, EUR/USD equals 1.2530 to 1.2351. It is that .0001 move higher is one pip.

Some brokers quote prices to the fourth decimal point. Hence, you can move from 1.2350 to 1.2351 with just one pip charge.

2. Currency Pair 

In forex trading, a currency pair refers to a quotation of a pair of different currencies with a quoted value of only one currency being stated against the other.

The first currency listed is called the base currency, while the other would be termed as counter or quote currency.

3. Pipette 

A pipette in forex trading refers to the unit of measure used to express the change in value within two currencies.

Thus, it is one-tenth of a pip and is used to quote prices in fractional pips format.

For instance, if the EUR or USD exchange rate can move from 1.23456 to 1.23457, this would be one pip move. Next, if it moves from 1.23457 to 1.23458, that would be two pip move.

4. Base Currency 

Base currency is the first currency in the currency pair.

The quote highlights the amount in base currency and is worth the measure against the second pair.

For instance, if the CHF or USD rate equals 1.6350, then one USD would be worth CHF 1.6350.

5. Bid Or Ask Price 

The bid price refers to the price a trader agrees to sell a currency pair. Furthermore, the asking price refers to a price at which a trader is ready to purchase a currency pair. The common difference between an ask and a bid is called the spread.

The bid can be wide or tight depending on the market’s liquidity. When the market is more liquid, the ask can be right. This means there is much difference between the two prices.

On the other hand, when the market is less liquid, the ask spread will be greater. This states that there is a greater difference between both prices.

6. Going Short Or Long 

When you go long on currency, you bet that it will appreciate in value with respect to the other. In the forex market, gold is also a form of currency.

You can also sell the currency for what you had initially paid.

On the other hand, going short is just the opposite. You can sell a currency in hopes that it will fall in value so that you can buy it later at a lower cost.

7. Leverage 

Leverage is the ratio between the capital amount used in the transaction and the required security deposit.

It denotes the ability to control many financial instruments with a small amount of capital. Thus, the range varies from 2:1 to 500:1.

8. Margin 

The margin is the amount of money as a trader you need to put in so that you can initiate a trade.

For example, if a trader needs to buy $100 worth of currency, then they are required to have $ 10 in their account as a margin.

It isn’t a down payment for any of your assets, but it simply shows a good-faith deposit that showcases the broker that you are serious about trading.

Wrapping Up

Trading within the forex market is daunting for beginners. But when you learn some basic understanding of forex concepts and terms, you can quickly become comfortable trading for flat currencies.

The lingo mentioned above will help you know the most important phrases you can use in forex trading. Such as margin, pips, leverage, and spreads.

Thus, with this key knowledge, you can confidently initiate your trading in forex. So, learn the basics and impress your date with forex lingo.