Currency trading or forex trading is considered to be one of the most lucrative side incomes for individuals in 2022. With the trading industry growing every year and currency values remaining relatively stable, you may be able to achieve financial freedom if you start out as a forex trader.
However, the journey to become an experienced trader is not a bed of roses. You will need to develop a lot of trading acumen and expertise over the years before you start bringing in huge amounts of money. In addition, the domain is riddled with confusing jargon and trading terminology, which can be overwhelming for a novice.
Even if you decide to learn forex trading with a suitable trading course, you may need to put in some extra work to familiarize yourself with complex forex trading conditions. This blog aims to unravel and simplify some of the most common forex trading terms for you.
What are the most common forex trading terminology?
Ignorance of general forex trading conditions can be a major hindrance to your career as a forex trader. Here are some of the most commonly used trading terms in the global forex domain.
- currency pair: Usually forex trading involves predicting the performance of one currency against a second currency. The two currencies involved in forex trading transactions are called a currency pair.
- Leverage: Leverage refers to the money you borrow from your trading account. Trading with leverage allows you to trade your favorite currency pairs without having to invest a huge amount of capital.
- Ask price or offer: A bid is an amount that a forex trader quotes a potential customer for selling a currency pair. Conversely, the asking price is the amount that the customer ultimately pays for buying the currency pair.
- Margin: Margin refers to an initial amount or capital that you must put in or show in order to open a trading position. Margin trading requires you to invest only a percentage of the full value of your position. This allows you to play with a larger position size.
- PIP: PIP is short for Percentage in Point and it reflects the smallest movements in the exchange rates for a specific currency pair.
Other commonly used forex trading terms are going long/short, lot size, bearish and spread.
How can you learn more about forex trading conditions in a short time?
You can learn about forex trading terms if and when you encounter them during your trading practice. You can also learn them if you regularly review trading content such as white papers, trading journals, financial news, and trading books.
The best and shortest way to familiarize yourself with these terms is to invest in a comprehensive forex trading course. This can help you hone your trading acumen and skills, in addition to increasing your knowledge of the trading world.
Start your search for a suitable forex trading course from a reputable trading school to become an experienced forex trader.