IJ Forex Trading Methods that can help you go far

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JAN 24

IJ Forex Trading Methods that can help you go far

Forex Market: Some Important TermsYou Should Know

If you are a newbie to the Forex world, chances are you wouldn’t be quite well versed with

the different terms used. Every market has its terminologies which are not widely used in our

day‐to‐day conversations.

Unawareness can lead to various troubles. Listed below are few important terms that can help

you understand the market in a much better way.

Currency Pair:

Many multi‐national companies deal with varied clients who pay money in different currencies.

This calls for currency pair; which comes into picture when two currencies are traded for one

another. This way, one can trade about any kind of currency against nearly any other kind of

currency provided in the Forex market. As there are various currencies available in the Forex

market, one has the liberty to pair different currency as one trade.

Spread:

This is basically the difference between the bid or buying price for a currency and the ask or

selling price for it. Every individual trading currency has to pass through broker. Every broker

adds a spread to the trading currency, and this is how they are able to make profits. While

trading currency, you observe numbers in your currency pairs. If your currency number is

higher than you will make profit, and in reverse case, you will have to take loss.

Pip:

This is considered as the smallest unit on the Forex market. In some of the cases you will

notice that two currencies have four digits to the right of the decimal points. The furthest

one is called as pip. In others, most importantly in Japanese yen, the pip is the second number

from decimal point. The difference of one pip between two currencies may represent only a

tiny amount of money going into your retirement fund, but that is fine.

Leverage:

In Forex market, leverage means using credit or margins to trade between two currencies.

With the usage of leverage one can make one dollar; which will have equal power like fifty

dollars. One should use this leverage carefully as it can lead you to heavy losses if ignored.

Margin:

Margins are the credits many brokers will extend to traders allowing them to trade larger

amounts of money without investing nearly as much. However, there is a risk involvement in

this. At times, the Forex market gets as scared a place as any other market. This initiates a

margin call; that is everyone who are trading on margins has to return all of the money they

borrowed.

I f y o u w a n t t o k n o w m o r e i n f o r m a t i o n a b o u t F o r e x T r a d i n g j u s t v i s i t

http://www.forexmentorpro.com and read some more additional details.

Posted on January 24, 2014, in Commodities and Futures and tagged forex currency trading system, online

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