Popular terms in forex trading can help you
learn more quickly. You will be able to know characteristics or uniqueness of its terms. Of course, this is important because people often make mistakes in understanding words for their trading activity.
Every investor should understand this. Although there are many phrases that are rarely known by investors, at least you should know some of its popular terms. Know before you feel regret, alright?
There is a differentiation between each term. It is because there are a lot of “trading” phrases in accordance with the transactions.
If you want to know terms in forex trading in detail, you are on the right page. Therefore, consider the following comparison of the five phrases.
3 Popular Terms in Forex Trading
Terms can be interpreted as unusual words, even acronyms. If investors left behind these
useful words, they may not have a good analysis and also knowledge to learn.
As a novice investor, there are 5 main popular phrases that may be used by surroundings. In order to find out its meaning, be diligent in exploring the differences between one another.
If you understand terms in forex trading, you will not hesitate to get your investment right. Therefore, here is a comparison as well as differences between them.
1. Leverage
In forex trading, leverage is a feature that you can use to get a potential profit greater than the capital you have. Usually investors optimize leverage to get a high position with less expenditure.
As an investor, you can adjust the amount of leverage according to the risk management you plan. For instance, the measurement of profit and loss is in a balanced condition.
You can use 1:500 as a point of your leverage. The contract size placing the price of $50,000 per lot without leverage can be $65,000. If using 1:500, the trader can place the price at only $130.
Leverage as one of the terms in forex trading allows traders to control prices. This provides flexibility in spare value in order to be profitable.
2. Spread & Pip
Another term that often appears is Spread & Pip. Pip itself is an acronym for Percentage in Points. It marks the change in the value of a currency pair that is traded in forex.
You can understand it like this. If the USD/JPN pair starts from 0.0075 to 0.0095, then the pip becomes 20. That is, it comes from the difference, which is 0.0020.
If pips count percentages, the spread focuses on the difference between the sell (bid) price and the buy (ask) price. An investor must know this because it is very vital.
For instance, if the selling price (bid) of the USD/JPN pair is 1.0140 and the purchase price (ask) is 1.0143. Then the spread is 0.0003 or 3 pips. Starting to understand, right?
Spreads & Pips are very often used by both novice and professional investors. The phrase used represents a percentage point of the price.
3. Margin Call
The last popular terms in forex trading is margin call. Margin call can be explained as a sign or warning to increase the margin by open or hold position for your trading.
If the previous term denotes counting activity, this is a simpler analysis. Increase margins to prevent losses. Use this term often because otherwise, the broker can immediately auto cut and close your position.
As an investor, such phrases knowledge must be carried out. Investors should be able to use those kinds of words in terms of maintaining profit. If you want to learn deeply about terms in forex trading, you can use Didimax forex broker as the best forex broker in Indonesia.