Terms every forex trader should know -
Before going deep into the Forex market, it is best that you know the common words that Forex traders use. Yes, you have to start your journey of learn Forex by exposing yourselves to bunch of words that you do not understand yet. It might feel confusing at first, but once you understand it is going to be really helpful for you.
How To Maximize Your Learning Process
There is no reason to be intimidated by these, because this article is going to help you to be one confident trader both now and in the future. Of course, to have the courage and confident in trading you first have to gather all the knowledge you can get. This will also make your research process easier in the future.
• Ask/Bid and Spread
Ask and Bid is the best potential prices where you can sell and buy. Ask is the price that the seller wants to receive. Bid is the price that the buyer wants to pay. When both agree on a price, then the trade will occur. To agree on a price, either the seller or buyer has to adjust with the other prices.
So, if the buyer is willing to pay for the Ask price, a transaction takes place. Or, if the seller is alright with the Bid price given by the buyer, then a transaction will also take place. The price difference between Ask and Bid is called Spread. So, the larger the gap of the prices means the greater the spread.
• Leverage
Leverage means you can borrow money from a broker to invest in something. The leverage in Forex is higher than other financial instruments and that is why people are attracted to Forex compared to others. In other words, you are using other people's money to invest and this has to be used wisely. The risk of trading is also very high.
You are given the ability to trade much more than the amount of money you have. It's because you are able to control a larger amount of money even when you only have a small deposit. To make the best use out of this, you can start small and increase it once you are more familiar with the risk management.
• Margin
When you are buying a house, you will need to make a down payment first. In Forex trading, Margin is the deposit that you are required to pay in a transaction. The broker will hold the money to open your position. When you don't have enough funds in your trading account, you will get a notification called Margin Call.
In order to learn Forex, you first must have a reliable source of education. I would suggest you to seek for a brokerage company that offers online education. A good example for this is Didimax, a broker company that provides free online source of
Forex trading knowledge on their website. Finding a source that you can trust is really important.
They also have mentors, financial consultant and offline class if you want even more of their excellent service. This will ensure that you get the best education when it comes to Forex and won't get easily fooled. After all, you are jumping into a whole new world and you don't want to take the risk. Learn Forex from their experience.
Why do you need to learn from others?
There are so many mistakes that a beginner Forex trader makes, but this is actually avoidable if you've prepared yourself first. Minimize your mistakes by learning what others have done. Didimax can help you do this. You are giving yourself a key that leads your path. After that, you can continue to expand knowledge with experience from the Forex market.