Forex Trading Glossary, Learn About Currency Trading

They are viewed as indicators of major long-term market interest, as opposed to shorter-term, intra-day speculators. Realized profit/loss The amount of money you have made or lost when a position has been closed. Retail investor An individual investor who trades with money from personal wealth, rather than on behalf of an institution. Retail sales Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of different types and sizes. This data provides a look into consumer spending behavior, which is a key determinant of growth in all major economies. Revaluation When a pegged currency is allowed to strengthen or rise as a result of official actions; the opposite of a devaluation.

forex meaning

In the past, forex trading was largely limited to governments, large companies, and hedge funds. Many investment firms, banks, and retail brokers allow individuals to open accounts and trade currencies. Forex refers to the global electronic marketplace for trading international currencies and currency derivatives. It has DotBig broker no central physical location, yet the forex market is the largest, most liquid market in the world by trading volume, with trillions of dollars changing hands every day. Most of the trading is done through banks, brokers, and financial institutions. Between 74-89% of retail investor accounts lose money when trading CFDs.

Types Of Foreign Exchange Trading

Variation margin Funds traders must hold in their accounts to have the required margin necessary to cope with market fluctuations. VIX or volatility index Shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge.” Volatility Referring to active markets that often present trade opportunities. G7 Group of 7 Nations – United States, Japan, Germany, United Kingdom, France, Italy and Canada. Gap/gapping A quick market move in which prices skip several levels without any trades occurring.

  • The more liquid and stable a currency pair is, the less of a spread there will be.
  • Like father, like daughter – she too has started collecting currency – except that her collection is for spending.
  • If you want to open a short position, you trade at the sell price, which slightly below the market price.
  • This often comes into particular focus when credit ratings are upgraded and downgraded.
  • The Forex spread is one of the main ways in which Forex brokers earn their money.
  • Just as the RBI controls remittances in and out of India, it also keeps a close watch on currency exchange transactions.

My interest led me to ; a website, where I learned everything about Forex trading and started my trading activities from and have continued since. It is widely recognised among Forex traders that just because technically Forex trading hours Forex are 24 hours a day, it doesn’t mean that you should. Day traders maintain that it is best to make your trades on nextmarkets during a period of high trading activity, rather than overnight when there is very little trading happening.

Learn The Ways To Trade Forex

This is where the opportunity lies in Forex trading on the nextmarkets platform. A forex broker can use the quotes of currencies of international currency exchanges, banks, local and foreign brokers, news agencies, and other reliable sources. Forex trading as it relates to retail traders is the speculation on the price of one currency against another.

forex meaning

Similarly, a fall in the exchange rate shows that the base currency is depreciating against the counter-currency or that the counter-currency is appreciating against the base currency. When we buy the EUR/USD pair, we’re actually buying the euro and selling the US dollar. Similarly, when we sell the EUR/USD pair, we’re actually selling the euro and buying the US dollar. The bid price represents how much of the quote currency the broker is willing to pay to buy the base currency from you. The ask price represents the amount of quote currency the broker is willing to accept to sell you the base currency. Just as the RBI controls remittances in and out of India, it also keeps a close watch on currency exchange transactions.

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